Capital gains tax (CGT) is a tax in the United Kingdom that is applied to the profit or gain you make when you sell an asset that has increased in value. The asset could be something like a second home, a business asset, or shares in a company.

 

CGT is not a separate tax but is instead calculated as part of your overall income tax liability. It is charged at different rates depending on the amount of your taxable income and your tax rate.

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If you are a UK resident and you make a profit or gain on an asset that you dispose of (sell, give away, or exchange), you may have to pay CGT. However, there are certain exemptions and reliefs that may apply, such as the annual CGT exemption, which allows you to make up to £12,300 of capital gains tax-free in the 2021-22 tax year.

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If you are required to pay capital gains tax, you must report and pay the tax within 30 days of disposing of the asset. If you do not pay the tax on time, you may be charged interest and penalties.

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It's important to note that the rules for capital gains tax can be complex, and you may want to seek the advice of a tax professional if you have questions about your specific situation.

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It's important to keep accurate records of your capital gains and losses, as you will need to report them to HM Revenue and Customs (HMRC) when you file your tax return. If you are unsure about your CGT obligations please schedule a free initial consultation with us to find out how we can help.