What is Capital Gains Tax (CGT)?Capital Gains Tax is a tax on the profit or gain you make when you sell or ‘dispose of’ an asset. You usually dispose of an asset when you cease to own it - for example if you: - sell it
- give it away as a gift
- transfer it to someone else
- exchange it for something else
- receive compensation for it - for example you receive an insurance payout when an asset has been destroyed
It's the gain you make - not the amount of money you receive for the asset - that's taxed.
The tax is applied on the taxable amount.
U.K exemptions to assets that are subject to capital gains tax.As of 2012-07-20 - your car
- personal possessions worth up to £6,000 each, such as jewellery, paintings or antiques
- stocks and shares you hold in tax-free investment savings accounts, such as ISAs and PEPs
- UK Government or 'gilt-edged' securities, for example, National Savings Certificates, Premium Bonds and loan stock issued by the Treasury
- betting, lottery or pools winnings
- personal injury compensation
- foreign currency you bought for your own or your family's personal use outside the UK
Capital gains tax applies on transferIn general any event that results in a transfer, such as giving money to someone, or having a divorce kicks off the capital gains tax. This has an effect of kicking you when you are down. The last thing you wish to do when going for a divorce or helping your kids in need is having to pay unecessarily for the privilege. Links |
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