CGT is a tax on an asset that is sold or given away that has increased in value since it was purchased.
For example, if you purchased a vase for £20,000 and sold it for £30,000, you have made a gain of £10,000.
As with all taxes, there are various allowances and exemptions available and some can be complex to calculate.
Every individual has an Annual Exempt Amount of £11,300. This means that the first £11,300 of any gain is not taxed. Therefore, following on from the example above, the exemption covers the entire value of the gain so that no CGT would be due.
Not all assets are subject to CGT and in particular there are peculiar rules regarding personal possessions and usually personal possessions which are worth less than £6,000 will not be subject to CGT.
The most notable CGT relief is Private Residence Relief. This relief means that the growth in the value of your family home will not be taxed. Again, the rules here are complex and particular care must be taken where you live in more than one home or there is a large amount of land attached to your property.
If you are planning to realise substantial assets in the near future please get in touch.
These notes have been prepared for the purpose of articles only. They should not be regarded as a substitute for taking legal advice.