• Posted 18th June 2015

Tax Free & Chargeable Capital Gains

Capital Gains Tax (CGT) is a tax which is charged on the profit in value of possessions from selling or disposing of a property or an investment. This charge is applicable to individuals and trustees but not to Limited Companies. While some of the assets are tax free, you don’t have to pay such tax if all of your gains in a year fall under tax free allowance.

List of chargeable capital gains

• Personal possessions worth £6,000 or more, apart from your car
• Property ( not your main home)
• If you’ve let your home for business purposes or it is large
• Business assets

There are several reliefs like Rollover/holdover relief on replacement of business assets , Business incorporation relief, Holdover gift relief, Entrepreneurs' relief, Taper relief , Indexation allowance that can help to reduce the chargeable gains. Along with such reliefs, incidental costs of acquisition and disposal also reduces the amount of chargeable gains.

List of tax free capital gains

• Gifts between husband and wife or civil partners
• Gifts to charities
• Selling your main home
• Most chattels whose value decreases over time
• Gains from NISAs, ISAs or PEPs
• Personal possessions not worth more than £6,000
• Betting, pools and lottery winnings
• UK Government bonds (gilts)
• Private motor car
• Certain business holdings qualifying for entrepreneur’s relief

The rate of Capital Gains Tax is 18% for the basic taxpayers and 28% for higher rate taxpayers. As such type of tax is paid through the self-assessment system, gains and losses must be declared on your self-assessment return. After all the reliefs and exemptions, they are added to your taxable income and taxed at your top marginal rate which must be payable by 31 January following the tax year in which the gain had occur. Capital Gains Tax can be very complex. So, if you want any advice in minimising CGT liabilities, feel free to contact our capital gains tax specialist.