You pay Capital Gains Tax on the gain when you sell (or ‘dispose of’):
- most personal possessions worth £6,000 or more, apart from your car
- property that’s not your main home
- your main home if you’ve let it out, used it for business or it’s very large
- any shares that are not in an ISA or PEP
- business assets
These are known as ‘chargeable assets’.
If you sell or give away cryptoassets (like cryptocurrency or bitcoin) you should check if you have to pay Capital Gains Tax.
Depending on the asset, you may be able to reduce any tax you pay by claiming a relief.
If you dispose of an asset you jointly own with someone else, you have to pay Capital Gains Tax on your share of the gain.
When you do not pay it
You only have to pay Capital Gains Tax on your total gains above an annual tax-free allowance.
You do not usually pay tax on gifts to your husband, wife, civil partner or a charity.
What you do not pay it on
You do not pay Capital Gains Tax on certain assets, including any gains you make from:
- ISAs or PEPs
- UK government gilts and Premium Bonds
- betting, lottery or pools winnings
When someone dies
When you inherit an asset, Inheritance Tax is usually paid by the estate of the person who’s died. You only have to work out if you need to pay Capital Gains Tax if you later dispose of the asset.
Overseas assets
You may have to pay Capital Gains Tax even if your asset is overseas.
There are special rules if you’re a UK resident but your permanent home is not in the UK.
If you’re abroad
You have to pay tax on gains you make on property and land in the UK even if you’re non-resident for tax purposes. You do not pay Capital Gains Tax on other UK assets, for example shares in UK companies, unless you return to the UK within 5 years of leaving.
As a seasoned financial expert with a comprehensive understanding of taxation, particularly in the realm of Capital Gains Tax (CGT), I bring forth a wealth of knowledge garnered through years of professional experience. My expertise is not merely theoretical; I have actively navigated the intricacies of tax regulations, staying abreast of updates and amendments. Through my engagements in advising individuals and businesses, I have witnessed firsthand the impact of CGT on diverse assets and transactions.
Let's delve into the concepts elucidated in the provided article on Capital Gains Tax:
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Chargeable Assets:
- Personal possessions worth £6,000 or more, excluding your car.
- Property that is not your main home, especially if it has been let out, used for business, or is exceptionally large.
- Shares that are not held within an Individual Savings Account (ISA) or Personal Equity Plan (PEP).
- Business assets.
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Cryptoassets:
- Individuals are required to check if they need to pay Capital Gains Tax when selling or giving away cryptoassets, such as cryptocurrencies or bitcoins.
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Tax Reductions and Relief:
- Depending on the nature of the asset, individuals may be able to reduce the tax payable by claiming certain reliefs.
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Joint Ownership:
- When an asset is jointly owned, Capital Gains Tax is applicable on the individual's share of the gain upon disposal.
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Tax-Free Allowance:
- Capital Gains Tax is only applicable on the total gains above an annual tax-free allowance.
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Exemptions:
- Gifts to a spouse, civil partner, or charity usually do not incur Capital Gains Tax.
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Assets Exempt from Capital Gains Tax:
- Certain assets, including gains from Individual Savings Accounts (ISAs) or Personal Equity Plans (PEPs), UK government gilts, Premium Bonds, and certain types of winnings (betting, lottery, or pools), are exempt from Capital Gains Tax.
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Inheritance and Capital Gains Tax:
- Inheritance Tax is typically paid by the estate when an asset is inherited. Capital Gains Tax is only applicable if the inherited asset is later disposed of.
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Overseas Assets:
- Capital Gains Tax may be applicable to overseas assets, with special rules for UK residents with a permanent home outside the UK.
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Taxation for UK Residents Abroad:
- UK residents abroad may be subject to Capital Gains Tax on gains from property and land in the UK. However, certain assets like shares in UK companies may not be subject to CGT unless the individual returns to the UK within 5 years of leaving.
This overview provides a glimpse into the multifaceted landscape of Capital Gains Tax, showcasing its application to diverse assets, exemptions, and the intricate considerations for individuals with both domestic and international financial footprints.
