Capital Gains Tax in the UK

What is Capital Gains Tax?

Capital gains tax is a tax levied on the profit you make when you sell an asset for more than you bought it for. In the UK, capital gains tax is charged on the gain made on the sale of assets such as property, shares, and other investments.

What are the rates of Capital Gains Tax?

The rates of capital gains tax depend on the type of asset you are selling and your individual circumstances. The current rates are as follows:

• Basic rate: 10%
• Higher rate: 20%
• Additional rate: 28%

What are the exemptions from Capital Gains Tax?

There are a number of exemptions from capital gains tax, including:

• The annual exempt amount: The first £12,300 of gains made in a tax year are exempt from capital gains tax.
• Principal private residence: Gains made on the sale of your main home are exempt from capital gains tax.
• Gifts and inheritances: Gains made on the sale of assets that you have inherited or received as a gift are exempt from capital gains tax.

How to report and pay Capital Gains Tax

You must report any capital gains you make on your annual tax return. You can do this online through the HMRC website or by completing a paper tax return.

You must pay capital gains tax by 31 January following the end of the tax year in which the gain was made.

Conclusion

Capital gains tax is a complex area of the UK tax system. If you are unsure about whether you need to pay capital gains tax, it is advisable to seek professional advice.