Capital Gains Tax (CGT)

Capital Gains Tax (sometimes shortened to CGT) is the tax you pay when you sell an 'asset' that has increased in value.

Your assets

For the purposes of Capital Gains Tax, your assets include:

  • Any properties that are not your main home (e.g. a holiday cottage or buy-to-let investment property).
  • Shares (not including those in an ISA or PEP).
  • Business assets (e.g. premises, machinery, shares or trademarks).
  • Any personal possessions worth more than £6,000 (not including your car).

If you sell ('dispose of') an asset, you are only taxed on the gain, or profit, that you have made, not on the value of the whole asset.

You may also have to pay tax if you have given away the asset, or swapped it for something other than money.

Tax-free allowance

In some cases, certain assets are tax-free, and you do not have to pay CGT if your gains are less than your total tax-free allowance for the year.

An individual's tax-free allowance for the year 2018-19 is £11,700.

For more information about Capital Gains Tax, including allowances and tax rates, see the gov.uk website.

Consult a Capital Gains Tax expert

Calculating Capital Gains Tax can be complex, and the penalties and consequences are serious.

For example, if you have disposed of a high-value item like a second home, and then use the proceeds thinking no tax was due, you may be unable to repay the tax when HMRC uncover the error.

As with all tax matters, you should consult an accountant or independent financial adviser (IFA) before taking any action.

Gaynor Haliday, Legal researcher

About the author

Gaynor Haliday is an experienced legal researcher and published author. She has had numerous articles published in the press and is a legal industry commentator.

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