What is CGT?
Capital Gains Tax (CGT) applies when chargeable assets are disposed of, and is applicable to individuals and trustees. Chargeable assets include all forms of property unless it is specifically exempt. The principle assets CGT applies to are land and buildings, and shares and business assets including goodwill.
What is a Capital Gain?
A capital gain occurs when the value of an asset at the date of disposal is higher than its value when it was acquired. An asset can be disposed of either by sale or by gift. If you give away an asset in a non-commercial transaction, the market value will replace any actual consideration paid. For assets acquired before 31 March 1982 the cost is usually taken to be the value on that day, although actual cost can be used in some circumstances.
What is the rate of CGT?
CGT is charged at the rate of 28% where the total taxable gains and income are above the income tax basic rate band. Below that limit, the rate is 18%. For trustees and personal representatives of deceased persons the rate is 28%.
Payment of CGT.
CGT is paid through the self-assessment system and gains and losses must be declared on your self-assessment return. The gains after all reliefs and exemptions are added to your taxable income and then taxed at your top marginal rate. The tax is payable by 31 January following the tax year in which the gain arose.