Capital Gains Tax

Introduction to capital gains tax

CGT is a tax payable on capital “gains”. In the event that you sell or give away an asset and that asset has increased in value, you may be liable to pay tax on the profit. This doesn`t apply when you sell personal belongings worth £6,000 or less or, in most cases, your main home. If you have sold, or are thinking of selling an asset which you think may be liable to CGT, there are a number of questions that you must ask. We have a separate section for each of these :

Please note: The following Information on CGT is intended to for guidance purposes only and should not be relied upon without seeking proper professional advice from a suitably qualified individual.

WHEN DO I HAVE TO PAY CGT?

You may have to pay CGT if, for example, you:

  • sell, give away, exchange or otherwise dispose of an asset or part of an asset
  • money from an asset – for example compensation for a damaged asset

You don’t have to pay CGT on:

  • your car
  • your main home, provided certain conditions are met
  • ISAs or PEPs
  • UK Government gilts (bonds)
  • personal belongings worth £6,000 or less when you sell them
  • betting, lottery or pools winnings
  • money which forms part of your income for income tax purposes

SOME POINTS TO BEAR IN MIND

  • if you are married or in a civil partnership and living together you can transfer assets to your husband, wife or civil partner without incurring CGT tax liability
  • you can’t dispose of assets to your children or others nor sell the assets cheaply without having to consider CGT
  • if upon sale of an asset, it is sold at a loss, you may be able to make a claim to deduct that loss from other gains; but only if the asset normally attracts CGT – thus you cannot offset a loss incurred on selling your car against gains from disposing of other assets
  • if someone dies and leaves their belongings to their beneficiaries, there is no CGT liability at that time. However, if an asset is later disposed of by a beneficiary at a later date, there may be a CGT liability applicable on the gain received between the market value at the time of death and the value of that belonging at the time of disposal.