Capital Gains Tax

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Capital Gains Tax is a tax on the gain or profit you make when you sell, give away or otherwise dispose of something that you own that has value.

There's an annual tax-free allowance and some additional reliefs that may reduce your Capital Gains Tax bill. Sometimes you may have no tax to pay.

Most assets are liable to Capital Gains Tax when you sell or dispose of them. This includes shares, property, business assets and personal possessions - whether they're in the UK or overseas. But some assets are exempt, such as

• your car
• (in most cases) your main home.
• personal possessions worth up to £6,000 each, such as jewellery, paintings or antiques
• stocks and shares you hold in tax efficient investment savings accounts, such as ISAs
• UK government or ‘gilt-edged’ securities eg National Savings Certificates, Premium Bonds and loan stock issued by the Treasury

The annual tax-free allowance for Capital Gains Tax is known as the 'Annual Exempt Amount'. The Annual Exempt Amount for tax year 2009/10 is

• £10,100 for each individual, personal representative or trustees for disabled people
• £5,050 for other trustees

It’s very important to keep any records associated with acquiring or disposing of assets. You should also retain any records that show your expenses in relation to the asset. These will help you work out the gain or loss and support your tax return or claim. Where tax is due it is payable by the end of the next January following the end of the tax year in which the gain arose. Gifts, inheritance, separation and divorce can all affect the treatment of assets under the capital gains tax regime.

The Financial Services Authority does not regulate some forms of tax advice.

http://www.hmrc.gov.uk/cgt/