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Capital gains tax

What is Capital Gains Tax (CGT)?

Capital Gains Tax is a tax on the profit or gain you make when you sell or ‘dispose of’ an asset.

You usually dispose of an asset when you cease to own it - for example if you:
  • sell it
  • give it away as a gift
  • transfer it to someone else
  • exchange it for something else
  • receive compensation for it - for example you receive an insurance payout when an asset has been destroyed
Captial tax application

It's the gain you make - not the amount of money you receive for the asset - that's taxed.

The tax is applied on the taxable amount.

U.K exemptions to assets that are subject to capital gains tax.

As of 2012-07-20
  • your car
  • personal possessions worth up to £6,000 each, such as jewellery, paintings or antiques
  • stocks and shares you hold in tax-free investment savings accounts, such as ISAs and PEPs
  • UK Government or 'gilt-edged' securities, for example, National Savings Certificates, Premium Bonds and loan stock issued by the Treasury
  • betting, lottery or pools winnings
  • personal injury compensation
  • foreign currency you bought for your own or your family's personal use outside the UK

Capital gains tax applies on transfer

In general any event that results in a transfer, such as giving money to someone, or having a divorce kicks off the capital gains tax. This has an effect of kicking you when you are down. The last thing you wish to do when going for a divorce or helping your kids in need is having to pay unecessarily for the privilege.