Capital Gains Tax
Capital Gains Tax (CGT) is a tax levied on the profit made from the sale or disposal of certain assets, such as property, investments, and personal possessions, in the United Kingdom. Here are some key points about CGT in the UK:
Who is liable for CGT: Individuals, trustees, and some types of businesses may be liable for CGT in the UK.
Taxable assets: CGT applies to various types of assets, including but not limited to, residential and commercial properties, stocks and shares, business assets, and personal possessions worth over a certain threshold.
CGT rates: CGT rates in the UK depend on the individual's income tax band. As of the 2023/24 tax year, the CGT rates for individuals are 10% for basic rate taxpayers (up to £50,270 of taxable income), and 20% for higher and additional rate taxpayers (above £50,270 of taxable income). There is a higher rate of 28% for residential property and carried interest.
Annual tax-free allowance: Individuals have an annual tax-free allowance, known as the Annual Exempt Amount (AEA), which is the amount of capital gains that can be realized in a tax year without incurring CGT. As of the 2023/24 tax year, the AEA for individuals is £12,300.
Exemptions and reliefs: There are various exemptions and reliefs available that may reduce the amount of CGT payable, such as the main residence relief for selling a primary residence, entrepreneur's relief for qualifying business assets, and gift holdover relief for gifts of business assets, among others.
Reporting and payment: Capital gains must be reported to HMRC on a Self-Assessment tax return, and any CGT due must be paid by the relevant deadline, which is usually 31 January following the tax year in which the gains were made. Penalties may apply for late filing or payment.
Special rules for non-residents: Non-residents may also be subject to CGT on certain UK assets, and different rates and rules may apply.
It's important to note that CGT rules can be complex, and it's advisable to seek professional tax advice from a qualified tax advisor or accountant to ensure compliance with UK tax laws and regulations.
Get in touch with Cheylesmore Chartered Accountants to handle your Capital Gains Tax.
