Capital Gains TaxWhat is Capital Gains Tax and who must pay it?

Capital Gains Tax (often referred to as CGT) is a tax that is charged when you sell, give away or exchange a valuable asset - such as a property - that has increased in value. The tax is therefore on the ‘gains’ or profit that you make when you cease to own that asset. Capital Gains Tax also applies when you receive money from an asset. For example if an asset that you own is damaged and you receive some compensation, this may also be subject to tax. You do not have to pay Capital Gains Tax on the following assets; your main home, your car, personal belongings that are worth £6,000 or less when sold, returns you make on Individual Savings Accounts (ISAs) or Personal Equity Plans (PEPs), UK Government bonds or winnings from betting, pools or a lottery. More info

So how much Capital Gains Tax do you pay? Since the 2008-9 tax year, there is one single Capital Gains Tax rate of 18% on taxable gains for individuals. Usually this is payable via your Self Assessment tax return, but if you do not usually complete one of these you’ll need to inform your local Tax Office. Capital Gains Tax is worked out for every tax year (April 6th to April 5th the following year). Every UK resident is allowed an annual tax-free capital gain amount of £10,100, and so when Capital Gains Tax is being worked out, this allowance (plus any losses you have made on other taxable sales during the year) is taken into consideration. Less