Tax impact on income from capital gains

Capital gains i.e. the profit earned from selling capital assets are taxable but they are generally on the lower side. We will check whether you are liable for capital gains tax or not and if yes, we will also calculate the capital tax applicable for your business. We will also separate the long term capital gains and short term capital gains of your business as each of them are calculated differently. As a result, you get maximum support and guidance when you avail our taxation services.

Nexa Accountants leverages the latest accounting software solutions that are integrated with cloud platforms so that you can communicate any tax updates or changes in real-time.


How to calculate CGT?

Simplifying Capital Gain Tax (CGT)

Consider the final value first, which is the market value of the sold asset.
Now, you need to subtract the initial value that you paid while purchasing or buying that particular asset.
If you spend any money on advertising and other costs such as stamp duty, dealing charges, etc. they are considered as allowable expenses. Allowable expenses can be deducted from the CGT.
Also, there are sometimes capital losses which you can use to get tax relief. Now, you need to add all the capital gains you earned in a year and subtract capital losses and annual allowances which are tax-free from that amount. This allowance was 11,300 pounds (UK) for the financial year 2017-18. Now, taxes are levied based on this amount which also differs according to the asset types. For example, capital gains are taxed at 18 per cent for basic taxpayers and 28 per cent for high-rate taxpayers when it comes to property sales.

Tax Relief for Losses

Get Tax Relief for Losses

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Cover losses

Whenever you sell or give away your possessions, you obtain tax relief for genuine losses. First, losses get subtracted from any gains you make in the same year. You have to subtract all these losses even if this is below your tax-free allowance. Still if there are some remaining losses, you can carry them forward. But if there are still some gains left, you next subtract any losses brought forward from previous years, but only so much as is required to minimize your gains to the level of your tax-free allowance.

Tax Relief for Losses

Whenever you sell or give away your possessions, you obtain tax relief for genuine losses.

01
Calculate Losses

First, losses get subtracted from any gains you make in the same year. You have to subtract all these losses even if this is below your tax-free allowance.

02
Remaining Gains

But if there are still some gains left, you next subtract any losses brought forward from previous years, but only so much as is required to minimize your gains to the level of your tax-free allowance.

03
Carry forward

Still if there are some remaining losses, you can carry them forward.

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