Capital Gains Tax

 

Capital Gains Tax is a tax on the profit when you sell something that’s increased in value.

It’s the gain you make that’s taxed, not the amount of money you receive.

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 What you pay it on

You pay Capital Gains Tax on the gain when you sell (or ‘dispose of’):

·       most personal possessions worth £6,000 or more, apart from your car

·       property that’s not your main home

·       your main home if you’ve let it out, used it for business or it’s very large

·       shares that are not in an ISA or PEP

·       business assets

When you do not pay it

You only have to pay Capital Gains Tax on your total gains above an annual tax-free allowance.

You do not usually pay tax on gifts to your husband, wife, civil partner or a charity.

What you do not pay it on

You do not pay Capital Gains Tax on certain assets, including any gains you make from:

·       ISAs or PEPs

·       UK government gilts and Premium Bonds

·       betting, lottery or pools winnings

 

Capital Gains Tax allowances

You only have to pay Capital Gains Tax on your overall gains above your tax-free allowance (called the Annual Exempt Amount).

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Gifts to your spouse or charity

·       There are special rules for Capital Gains Tax on gifts or assets your spouse or civil partner and charity

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Work out if you need to pay

You need to pay Capital Gains Tax when you sell an asset if your total taxable gains are above your annual Capital Gains Tax allowance.

 

Report and pay Capital Gains Tax

You can report Capital Gains Tax you need to pay:

·       using the Capital Gains Tax on UK property service 

·       straight away using the ‘real time’ Capital Gains Tax service

·       annually in a Self Assessment tax return

 

Capital Gains Tax rates

You pay a different rate of tax on gains from residential property than you do on other assets.

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If you make a loss

You can report losses on a chargeable asset to HM Revenue and Customs (HMRC) to reduce your total taxable gains.

Losses used in this way are called ‘allowable losses’.

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Record keeping

You need to collect records to work out your gains and fill in your tax return. You must keep them for at least a year after the Self Assessment deadline.

You’ll need to keep records for longer if you sent your tax return late or HM Revenue and Customs (HMRC) have started a check into your return.

Businesses must keep records for 5 years after the deadline.

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Market value

Your gain is usually the difference between what you paid for your asset and what you sold it for.