Individuals

Individuals

Capital Gains

CGT is a tax on capital gains. Profits on the disposal of certain assets are subject to capital gains tax.

What assets might lead to a CGT charge?

Most assets can lead to a CGT charge when you dispose of them, for example
  • Shares in a company
  • Units in a unit trust
  • Land and buildings
  • Higher value jewellery, paintings, antiques and other personal effects
  • Business assets including goodwill

For UK domiciled and resident individuals CGT is chargeable whether the assets are situated in the UK or abroad.

What assets do not lead to a CGT charge?

Some assets are exempt. For example, you will not have to pay CGT on the disposal of: -

  • Your private car
  • Any foreign currency held for your own personal use
  • Jewellery, paintings, antiques and other personal effects that are individually worth £6,000 or less (if you have a set, for example a set of chess figures, you do not pay CGT if the value of the set as a whole is £6,000 or less)
  • National Savings Certificates, Premium Bonds
  • UK Government stocks ("Gilts")
  • Assets held in an Individual Savings Account (ISA) or Personal Equity Plan (PEP)
  • Betting, lottery or pools winnings

If you sell an asset

Typically, you have made a gain if you sell an asset for more than you paid for it. It is the gain that is taxed, not the amount you receive.

If you give an asset away

If you give an asset away, you normally look at what it is worth, not what you get for it. The same is true when you sell it for less than its full worth in order to give away part of the value.

If you dispose of an asset you had been given

You might dispose of an asset that you had received as a gift. When you work out the gain you normally use the market value of the asset when you received it.

If you have inherited an asset

If you inherit an asset, the estate of the person who died does not pay CGT at that time. If you later dispose of the asset, you work out the gain by looking at the market value at the time of the death.

Some other cases where you might have to pay CGT

You may also have to pay CGT if you dispose of part of an asset or exchange one asset for another. In addition, CGT may be payable if you receive a capital sum of money from an asset without disposing of it, for example if you receive compensation when an asset is damaged.