- Working out your capital gain or loss - the basics
- How to report a capital gain
- What to do if you've made a loss
- Record keeping and Capital Gains Tax
Working out your capital gain or loss - the basics
You may have to pay Capital Gains Tax when you sell or dispose of an asset. You'll have to work out the gain or loss separately for each asset. You then add everything together to get the overall gain or loss for that tax year and to see if Capital Gains Tax is due.
On this page:
- When to work out your gain or loss
- Information you'll need
- How to calculate the gain or loss for each asset
- Using market value - some special rules
- How to work out your Capital Gains Tax bill
- Reporting a gain or loss
- More useful links
When to work out your gain or loss
It's useful to work out your gain or loss at the time you sell or dispose of an asset. This will help you:
- tell HM Revenue & Customs (HMRC) about the gain at the right time
- know how much money you'll need to pay when the tax is due
- make any claims in time (eg a claim for losses)
- work out what records and receipts you need - and keep them safe
Information you’ll need
You'll need the following information to work out your gain or loss and, if necessary, complete your tax return:
- Description of the asset - for example the size and location of the property, the type and number of shares, the age of an antique
- Sale or disposal date - the date you sold, gave away or otherwise disposed of the asset
- Sale or disposal ‘proceeds’ – usually the amount you received for the asset, but it may be the market value instead (for example if you gave the asset away) - see more in the ‘Using market value’ section below
- Purchase or acquisition date - the date you bought, were given or otherwise acquired the asset
- Purchase or acquisition costs - usually the amount you paid for the asset, but it may be the market value instead (for example if you inherited the asset) - see more in the ‘Using market value’ section below
- Details of other costs - expenses associated with buying and selling the asset, such as stockbrokers' fees or money you've spent on improvements to increase the value of the asset (eg an extension to a house)
- Details of any reliefs you're claiming - such as Private Residence Relief if you're selling your own home or Entrepreneurs' Relief if you're selling your business
See how Private Residence Relief works when you sell your own home
Find out about Entrepreneurs' Relief and your business assets
How to calculate the gain or loss for each asset
You must work out the gain or loss separately for each asset you sell or dispose of. If you have to complete a Self Assessment tax return and the Capital Gains Tax summary pages (form SA108), you must attach each calculation with your tax return.
In straightforward cases, you take the disposal proceeds (usually the amount received) and deduct your costs and reliefs. This gives you the net gain or loss for each asset.
In some cases, you may need to use the market value of the asset (instead of the sale or purchase price). See the ‘Using market value’ section below.
Example 1
Mrs B sells a valuable painting in June 2008 for £60,000.
She bought it in May 2000 for £40,000.The net gain is £20,000 (£60,000 - £40,000).
Example 2
Mr F sells some shares in January 2009 for £30,000.
He bought them in March 1999 for £40,000.
The net loss is £10,000 (£30,000 - £40,000).
He'll need to tell HMRC about the loss if he wants to use it to offset other gains.
See more on what to do if you've made a loss
More help with your calculation
You can find detailed step-by-step guides on how to calculate each gain or loss on various types of assets (such as shares and property) in the links below.
You can also download a working sheet and use it to calculate straightforward gains and losses.
If you file your tax return online, you’ll find an electronic version of the working sheet that works out some of the numbers for you.
Download a working sheet to help calculate your gain or loss (PDF 30K)
How to calculate capital gains or losses on property
How to calculate capital gains or losses on shares
How to calculate capital gains or losses on personal possessions
How to calculate capital gains or losses on business assets
Using market value - some special rules
Sometimes you need to use the market value of the asset instead of the sale or purchase price.
Some common examples of when to use market value include:
- Assets owned at 31 March 1982. You only pay tax on any gains made since 31 March 1982. So if you acquired an asset on or before that date and still owned it on 31 March 1982, you work out the gain or loss using its value on 31 March 1982 instead of its actual cost.
- Inherited assets. You only pay Capital Gains Tax if you sell or dispose of an asset after you inherit it and make a gain. In this case, you use the market value of the asset at the date of death.
- Gifts. You'll need to use the market value if you've given away an asset - or if you’ve sold or disposed of an asset you've been given. There are different rules if you made a gift to your spouse or civil partner (see the link below).
See how gifts and inherited assets are treated for Capital Gains Tax purposes
Example
Mrs T gives a valuable antique to her son in June 2008.
Her son pays her a small sum of £5,000 as a token gesture.
The market value of the antique on the date of the gift is £50,000.
Mrs T bought it in June 2001 for £40,000.
There are no reliefs due.
The net gain is £10,000 (£50,000 - £40,000).
The £5,000 paid by her son as a token gesture is ignored.
How to work out your Capital Gains Tax bill
Once you've worked out all of your individual gains and losses - for each asset you’ve sold or disposed of - you'll need to work out the overall gain or loss to see the tax due. In most cases:
- You add together all of your gains for that tax year.
- You add together all of the losses you've made for that tax year.
- You deduct any allowable losses you've made that year from the gains to work out the overall gain.
- If the overall gain is below the annual tax-free allowance (known as the ‘Annual Exempt Amount’), there's no Capital Gains Tax to pay.
- If the overall gain is above the Annual Exempt Amount, you can deduct unused losses from a previous tax year. You only need to use enough of the losses to reduce your gains to the Annual Exempt Amount. You can carry the rest forward to future tax years.
- If the overall gain is still above the Annual Exempt Amount, you deduct the Annual Exempt Amount and pay tax at 18 per cent on the balance.
Example
Mr P made a gain of £20,000 on a property he sold in June 2008.
He also sold some shares in July 2008 making a gain of £50,600.
His total gains for 2008-09 are £70,600 (£50,600 + £20,000).
The Annual Exempt Amount for individuals for 2008-09 is £9,600.
Mr P's gains are above this amount - so he deducts the Annual Exempt Amount from his gains.
His overall gain is now £61,000 (£70,600 - £9,600 = £61,000).
The Capital Gains Tax rate is 18%.
He must pay Capital Gains Tax of £10,980 (£61,000 x 18%).
Find out more about the annual tax-free allowance
What to do if you've made a loss
Reporting a gain or loss
If you haven't received a tax return and have Capital Gains Tax to pay or wish to make a claim (eg for losses), you'll need to write to your Tax Office.
If you already complete a Self Assessment tax return, you may need some additional Capital Gains Tax pages.
Find out more about tax returns and reporting a capital gain
What to do if you've made a loss
Get form SA108 - the Capital Gains Tax pages of the tax return
More useful links
Is your asset liable to Capital Gains Tax?
See what records you need to keep for Capital Gains Tax
Download a guide to completing the Capital Gains Tax pages (PDF 110K)
