Calculate Capital Gains in UK
HM Revenue & Customs, the tax agency of the United Kingdom, assesses a tax at the marginal rate of income tax for individuals and corporations that experience capital gains in the UK. However, individuals and businesses are able to reduce capital gains taxes significantly with "taper relief," which is used to calculate a discount in gains held for 2 years or more (1 year or more for business assets).
Instructions
Calculate Capital Gains in the UK
1. Maintain all documents pertaining to the purchase and sale of assets, invoices and receipts related to any allowable improvements to your property, and appraisals of valuation or statements of damages to your property.
2. Create, in the form of a spreadsheet or database, a transaction register of all assets you sold during the tax year.
3. Include data-entry columns on this transaction register for dates of purchase and sale, prices of purchase and sale, description of assets and shares or units bought and sold in the case of securities.
4. Insert columns to calculate length of time each sold asset was held between purchase and sale and the net gain (or loss) from each sale after subtracting purchase price and the cost of improvements.
5. Categorize each asset sold based on whether it was used for business or non-business purposes while it was in your hands. The mere fact that you eventually sold the item does not make it a business asset.
6. Download the guide called "Notes on Capital Gains" from the Inland Revenue website and consult Section 6 to find the amount of taper relief that may apply to your capital gains tax when you calculate it, based on the categorization and length of time held for each asset you sold (see Resources below).
7. Calculate the taxable capital gains for each asset by multiplying the actual capital gains by the taper relief percentage found in Section 6.
8. Record the information from your transaction register in the capital gains pages of your tax return and file them with your full return.
