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What is Capital Gains Tax?

 

In short, Capital Gains Tax is a tax on the profit when you sell (or ‘dispose of’) something (an ‘asset’) that’s increased in value.

Put simply it is the gain you make that’s taxed, not the amount of money you receive.

When you dispose of an ‘asset’ this could include:

  • Selling it
  • Giving it away as a gift, or transferring it to someone else
  • Swapping it for something else
  • Getting compensation for it – like an insurance payout if it’s been lost or destroyed

For more information regarding CGT please visit https://www.gov.uk/capital-gains-tax

CGT Assets – What You Pay On

CGT becomes payable when you sell or dispose of personal possessions worth £6000 or more. Other payable CGT also becomes payable upon:

Capital Gains Tax Allowances Explained

You only have to pay Capital Gains Tax on your overall gains above your tax-free allowance (called the Annual Exempt Amount). The Capital Gains tax-free allowance is:

  • £12,300
  • £6,150 for trusts

You can see tax-free allowances for previous years via the official treasury website at https://www.gov.uk/capital-gains-tax