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 2009-2010 tax year is £10,100. CGT will only become payable if an individual’s total gains in a tax year exceed this annual exemption.

For disposals since 6 April 2008, CGT is payable at a flat rate of 18%.

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.