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I'm a student, currently away from university for a year in industry (basically I'm working full-time September to September instead of studying full-time).

I sold some US at a profit via a trading app and I wanted to make sure I'm in complete legality with my earnings.

For this tax year, my income will be 14k.

Is the capital gains allowance of 12k unrelated to the tax-free allowance of 12.5k? As in, am I allowed to make 12k of capital gain on top of the tax-free amount I'm making from my normal income? Or am I supposed to pay the base rate of 10% on capital gains?

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You are correct – the allowances work independently, i.e. you are allowed to make both £12.5k income and £12k capital gain in a year without being liable for either income tax or capital gains tax (CGT).

They taxes are, however, related in a different way: the rate of capital gains tax you pay depends on which income tax band you are in.

Since you are in the basic rate tax bracket this year, if you make more than £12k on your sale of US shares, you will be liable for the lower rate of 10% CGT on the amount above the threshold (i.e. the gain minus £12k).

If your income for the year were to exceed the basic rate threshold and push you into the higher rate income tax bracket, that rate of capital gains tax would be higher as well at 20%.

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