Capital Gains Tax

Capital Gains Tax – or CGT as it is commonly referred to – is a tax due on chargeable gains made by individuals when assets are disposed of. Disposal arises when ownership of an asset ceases usually through sale, gifting or exchange.

A chargeable gain is, very broadly, the difference between the value of an asset at the time of disposal and the cost of buying the asset. Any costs incurred in buying or enhancing the asset are deducted.

Each individual has an annual CGT exemption allowance which for the 2011-2012 tax year is £10,600. CGT will only become payable if an individual’s total gains in a tax year exceed this annual exemption.

For individuals whose income and gains remain below the basic rate band for income tax (currently £35,000), after allowing for deductions (i.e. losses, and the annual exempt amount) the rate of CAPITAL GAINS TAXCAPITAL GAINS TAX
The tax payable on profits made on the sale of assets or property other than your home. will remain at 18%. For individuals whose income and gains exceed the basic rate band, trustees and personal representatives, the rate will increase to 28% as from 23 June 2010.

Certain assets are exempt from CGT. These include:

• An individual’s principal private residence
• Private motor vehicles
• National Savings Certificates and Premium Bonds
• Gilts
• Gambling winnings
• Assets gifted to a charity or certain national institutions as museums
• Chattels
  

To see how we can minimise your CGT liability, contact us to arrange a free initial consultation.