CGT, added to income or on separate scales?

The govt website

below the starting rate limit at 10%, between the starting rate and basic rate limits at 20%, and above the basic rate limit at 40%. "

Please can someone clarify this? After subtracting the CGT allowance (£8,800 this year), is the residual capital gain:

## Number 1.

## So if, for example, your income (after allowances) leaves you with just £1,000 of the BR (22%) band unused, then the first £1,000 of CG (after deduction of the £8.8k) wil be taxed at 22%, and the rest at 40%.

For example, if my salary puts me in the 40% tax band and I have a total realised capitcal gain of £10,000. is the £1,200 residual captial gain (£10,000-£8,800) taxed at 40% or 10%?

## 40%

Sorry to ask what must be an elementary question but I hope someone can take a moment to put me straight.

thank you,

Robert

Martin, please configure your browser to mark quoted text properly. Better still, ditch Outhouse Express.

Your answer is wrong, by the way. The first £1000 of CG would be taxed at 20%, not 22%.

Robert, it would help if you configured your newsreader not to add "Content-Transfer-Encoding: quoted-printable" to the header, this is apparently what confuses OE.

Answer (1) is not quite right either. For instance, if your income from other sources were £1000 below the Personal Allowance (£5035 this year), then the first £1000 of CG would be taxed at 10%, not 0%, that is to say the £8800 deduction is instead of, not in addition to, the £5035.

Essentially all your normal income is put into one bin (bin 1), while capital gains go into another (bin 3). Then you can take £5035 from bin 1 and £8800 from bin 3 tax-free. After that, money from bins 1 and 3 (in that order) is poured into bin A, a £2150 measuring jug. Anything that doesn't fit goes into bin B, of capacity £33300-£2150. Anything that doesn't fit goes into bin C (which is of infinite capacity). Then the taxman takes 10% of what's in bin A and 40% of what's in bin C. Bin B is taxed at 20% or 22% depending on whether the money came from bin 3 or bin 1.

It's actually more complicated because savings interest goes into bin 2, and there are special rules for dividends.

Thank you Ronald and Martin. Ronald, the 22% vs 20% was still puzzling me but now you have explained that as well, very clearly.

I do not think I can aler whether my newsreader adds "Content-Transfer- Encoding: quoted-printable" because it is Google groups :-( I will look into it though.

regards,

Robert

I think you've answered your own point with...

I've pointed this out to people many times in assorted NGs. It's the income message being QP which indeed triggers the known bug in OE.

It's served me well for many years...:-) What do you recommend in the way of something free and quick to learn?

Oops - too much haste. Fortunately the correct rate was in the OP.

You mean not complete. I focused on the OP's concern which seemed to be the HR threshold.

Which is why a brief answer (but without my 22% typo) can often be simpler.

If it's a "known bug", why don't MS fix it?

I recommend ditching Windows too. :-)

I use KNode under Linux (Redhat 7.3) , which ain't too bad. It (KNode, not Linux) does crash occasionally, but then I'm using a pretty old version which I haven't felt the need to upgrade since I set up my current system over 4 years ago.

Quite. But they rarely do fix these things - except for maybe the most serious security holes, and even those rather slowly and not too thoroughly.

It just isn't a big problem, most of the time. It affects all emails, not just NGs. When it's a big problem, I just squirt offending "QP" back to myself, then hit reply and the >>>> magically appear.

I suspect this is most people's view. It ain't [badly] broke, don't fix it etc.