Capital Gains Tax (CGT)
In the UK, capital gains tax (CGT) is a tax on the profit you make when you sell (or “dispose of”) an asset that has increased in value. The asset could be a property, a work of art, or shares in a company, for example.
CGT is only payable on the gain you make, not on the whole value of the asset when you sell it. For example, if you bought a property for £200,000 and sold it for £300,000, your gain would be £100,000, and you would pay CGT on that amount.
In the UK, CGT is paid at different rates depending on the type of asset you are selling and your personal circumstances. For most assets, CGT is charged at a rate of 10% or 20%, depending on your taxable income and whether you are a basic rate or higher rate taxpayer. Some assets, such as your main home, are generally exempt from CGT.
It’s important to note that CGT rules can be complex, and you may need to seek professional advice if you are planning to sell an asset that is subject to CGT.