If you have assets in the UK and are looking to sell, or have sold them, you may have to pay Capital Gains Tax (CGT). Taxable assets can be anything from second properties to certain types of shares. It’s difficult to figure out whether or not you are liable to pay CGT, but if you are, you’d best prepare, as the rules and requirements for this type of tax are complex.

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What exactly is Capital Gains Tax?

Capital Gains Tax is a tax on the profit you make when you sell, or ‘dispose of’, an asset that has increased in value. It is important to note that you are taxed on the gain you make when selling, not on the entire amount of money you receive for the asset.

There are, however assets that are tax-free. You also don’t have to pay Capital Gains Tax if all your gains in a year are under the tax-free allowance, which is currently £11,300, and £5,650 for trusts.

Annual Exempt Amounts

Customer group

2014 to 2015

2015 to 2016

2016 to 2017

2017 to 2018

Individuals, personal representatives and trustees for disabled people

£11,000

£11,100

£11,100

£11,300

Other trustees

£5,500

£5,550

£5,550

£5,650

 

Which of your assets are subject to CGT?

Capital Gains Tax applies to most personal possessions worth more than £6,000 (other than your car). It also applies to:

  • Property that isn’t your main home*
  • Business assets
  • Shares that aren’t ISA or PEP

*Please note: Your main home can be taxed if you have let it out, use it for business purposes or if it has grounds exceeding the permitted area of 1.25 acres.

Capital Gains Tax does not apply to a number of financial transactions, including:

  • ISA or PEP shares
  • UK government gilts and Premium Bonds
  • Betting or lottery winnings

Do I need to pay Capital Gains Tax?

Whether or not you need to pay CGT will depend upon a variety of factors, including the type of assets you have disposed of and the allowable losses.

It’s important to report any Capital Gains Tax you need to pay in the appropriate section of your Self Assessment tax return.

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