Tax impact on income from capital gains

Capital gains i.e. the profit earned from selling capital assets, are taxable but generally at a lower rate. We provide a service that checks whether you are liable for capital gains tax and if so, we will calculate the capital tax applicable for your business. We do this process in two steps, the first by calculating your long-term capital gains tax and then by calculating your short-term capital gains tax. We use this process as both these forms of tax are calculated differently. As a result of this you receive the maximum support and guidance available from our tax services.

Nexa Accountants uses 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)

Determine the market value of the asset to be sold.

Subtract the initial cost of acquiring the asset.

Deduct any allowable expenses. These can include stamp duty, dealings charges, etc.

Deduct your capital gains tax-free allowance. This allowance is £12,300 UK for the financial year 2020-21.

If there is any taxable gain remaining, deduct any capital losses brought forward. (if applicable)

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. All losses get subtracted from any gains you make in the same year, even if they are below your tax-free allowance. Still if there are some remaining losses, you can carry them forward. If there are still Capital gains left above your tax-free allowance, you next subtract any Capital losses brought forward from previous years, but only so much as is required to minimise your gains to the level of your tax-free allowance.

Tax Relief for Losses

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.

Remaining Gains

If there are still gains available, the next step would be to subtract losses brought forward from the previous years, but only the required amount to minimise gains to the level of your tax-free allowance.

Carry forward

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