So I was looking at the amount of tax free earnings you can get from capital. This scenario is appreciation on a property selling of about £10,000. This, of course, comes (possibly) under the £11,100 threshold of tax free capital gain.

I am, however, confused about how the tax free amount works with normal tax free amounts.

Is the tax free capital gain amount separate to normal tax free amounts? Imagine I have salaries or I earn rent for the year, that has a tax free barrier of £10,000 (or whatever). Does the tax free capital gain apply only to the actual transaction of selling the house (and similar transactions for that year)?

  • 1
    What you call 'normal' is actually 'income', which may help make it clearer that 'capital gains' are in a separate pot.
    – AakashM
    Dec 18 '15 at 14:56
  • @AakashM Thanks, that does help. Sometimes just using the right language makes things clearer
    – Sammaye
    Dec 18 '15 at 16:15

The capital gains allowance is completely separate from your income tax personal allowance. In the current tax year you get £11,100 CGT allowance regardless of what your income subject to income tax is.

Where the 2 taxes do interact is in determining what rate of CGT you pay on gains beyond your allowance.

If your income alone pushes into the higher or additional income tax bracket you pay 28% CGT.

If you're a basic rate income tax payer you pay 18% CGT until your income plus taxable capital gains equals the higher rate threshold, then you pay 28% above that.


Capital gains tax is separate to income tax; i.e. you have an allowance for both income and capital.

Dividends are taxed as income (unless held inside an ISA) - though soon everyone will have a £5k allowance which is tax free.

Note that some approved employer share save schemes have special rules.

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