WHAT IS CAPITAL GAINS TAX?
Simply put, Capital Gains Tax (CGT) is an HMRC tax charge used in the United Kingdom. It gets charged against the increase in value from selling or ‘giving away’ property, shares, or personal possessions.
A capital gains charge (or a tax levy) could also be due on other types of accumulated profit. Thus, disposing of an investment or business asset you once owned could be liable for CGT.
As a result of the 2016 Budget, the current charges for Capital Gains Tax in 2022 are now levied at two different rates.
The current charge rate for CGT on most assets (excluding residential property) is 10% for basic rate taxpayers (reduced from 18%). The rate jumps up to 20% for taxpayers who fall into the higher rate tax band (reduced from 28%).
The History of Capital Gains Tax in the United Kingdom
There was one primary driver to the introduction of Capital Gains Tax in the United Kingdom. In fact, it was the rapid growth in property values post World War II.
This led to some property developers ‘deliberately’ leaving office blocks empty. Hence, a rental income could not be established and greater capital gains could be realized.
As a result, the UK Capital Gains Tax system was officially introduced by the Chancellor at the time – Mr. James Callaghan in 1965.
Capital Gains Tax Helpline
Capital Gains Tax Queries
HM Revenue and Customs
BX9 1AS
United Kingdom
Telephone: 0300 200 3300
Textphone: 0300 200 3319
Outside UK: +44 135 535 9022
Monday to Friday: 8am to 6pm
Closed on Saturdays, Sundays and
UK bank holidays
Note: The main section contains more information about UK taxation and tax laws, including the penalties for failing to meet (or evading) the obligations set out by the British Government.
Capital Gains Tax (CGT)
This section overviews Capital Gains Tax rules on profit realized by the disposal of assets. Find out how to work out the current rates of CGT and how to pay tax owed.
Personal Assets (Chattels)
Check how to work out Capital Gains Tax on personal possessions (chattels) after ‘disposing of’ or selling assets valued at £6,000 or higher.
CGT Reliefs and Exemptions
Business Asset Disposal Relief
This section contains information on the qualifying conditions for claiming Business Asset Disposal Relief (known as the Entrepreneurs’ Relief until 6th of April 2020).
Business Asset Rollover Relief
This guide explains how to use Business Asset Rollover Relief for companies and how to complete (HMRC) helpsheet HS290 to claim BARR.
Holdover Relief on Gifts
This guide, the Gift Hold-Over Relief helpsheet, and the calculation example, will help you understand the basics of transferring business assets and similar transactions.
CGT for Small Businesses
Capital Gains Tax may be liable any time you produce a profit. Find out the full liabilities on Capital Gains Tax for business owners and how to work out the gain.
Tax When Selling Buildings or Land
Private Residence Relief
This section explains how to use Private Residence Relief to avoid paying Capital Gains Tax when you sell your home (or ‘dispose of’ it) in the United Kingdom.
Selling a Property for Gain
Check what happens with Capital Gains Tax when you sell a property, how to work out the gain, and how to pay if it is more than your annual allowance.
Note: Another section explains Capital Gains Tax for non resident selling a UK property, when you might get Private Residence Relief, and how to work out the taxable gain (or loss).
Tax When You Sell Shares
This help guide explains how to work out Capital Gains Tax when selling shares and other funds, such as investment clubs, and how to claim tax relief to reduce the amount you pay.
Note: Another section explains how to check if you need to pay tax when selling cryptoassets or giving away crypto currency (e.g. Bitcoin).
Trusts and Taxes
This section contains information about trusts and taxation, reasons for setting up a trust, and how they are taxed by HM Revenue and Customs (HMRC).
Wills and Probate
Dealing with the will, probate and inheritance of a deceased person can be complex. The section will help you sort through the affairs of wills and probate.
Note: Another section contains more information about Inheritance Tax rules and rates in Great Britain (England, Scotland, Wales) and Northern Ireland.