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UK Capital Gains Tax Explained

This section explains the amount of gains and allowances (or tax rates) you can make each year. Check how you become liable for Capital Gains Tax - even though some capital gain is tax-free.

Some of the topics covered in this CGT help guide include Business Asset Roll Over Relief, Entrepreneurs' Relief, and wills, probate, and inheritance.

WHAT IS CAPITAL GAINS TAX? In simple terms Capital Gains Tax (CGT) is a tax charge.

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 2021 are now levied at two different rates.

The current charge rate for CGT 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. It was the rapid growth in property values post World War II.

This led to some property developers 'deliberately' leaving office blocks empty. A rental income could not be established and greater capital gains could be realized. Thus, the UK Capital Gains Tax system got introduced by the Chancellor at the time - James Callaghan in 1965.

Capital Gains Tax Guide

Business Asset Rollover Relief

Capital gains may be liable on the proceeds made by the sale or disposal of old assets. But, investing the profit into new business assets can defer the chargeable gain.

Capital Gains Tax

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.

Capital Gains Tax for Business

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.

Capital Gains Tax on Chattels

A gain is the difference between the purchase price and the selling price. Find out how to calculate Capital Gains Tax on personal possessions.

CGT When You Sell Property

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.

Entrepreneurs' Relief

Information on claiming HMRC Entrepreneurs' Relief and how it works. Check how to pay less Capital Gains Tax after you sell or 'dispose of' a business (or part of it).

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.

Capital Gains Tax Guide and Overview for United Kingdom