Capital gains tax

Capital Gains Tax is a tax to be paid on the profit you make when you sell (or ‘dispose of’) an asset that has increased in value. It’s the profit you make that is taxed, not the amount of money you receive when you sell the asset.

Do I need to pay Capital Gains Tax (CGT)?

It will depend on the type of asset sold as to whether CGT is payable and the specific circumstances of the individual or business. For instance, the sale of a residential property is not subject to CGT if it is your main home, but the sale of a second property bought on a buy-to-let basis, for example, will attract CGT. Other asset types which, when sold, will be subject to CGT include business assets, shares not in an ISA or PEP and personal possessions worth £6,000 or more, apart from your car. However, you only pay CGT on gains made above the annual tax-free allowance of £12,300 and you do not usually need to pay tax on gifts to your husband, wife or civil partner.

How can Downham Associates help?

It is not always straightforward to know whether the sale of an asset will lead to a CGT tax liability so it is always better to seek professional advice from one of our tax specialists who will be able to advise on the tax treatment of different asset types along with the different tax bands and annual allowances applicable. This will give you peace of mind and ensure that any tax liability is mitigated where possible.