Capital Gains Tax Advice & Information
Capital Gains Tax (CGT) is a tax paid when you dispose of assets
or receive a sum of money for an asset. In general terms if the
asset is worth more than it was when you acquired it then it is
seen as a ‘gain'. The following are examples of items that
may be subject to CGT-
Property, buildings or land that you have disposed of
Shares in a company
Goodwill in a business
High value goods, antiques, paintings, expensive jewellery
Units in a unit trust
When is CGT applied
Capital gains tax is not just applied to the sale of an asset.
The following are examples of the different situations that may
lead to CGT being applied-
If you sell an asset for more than you paid for it then you have made a gain. It is the gain that is taxed, not the amount you receive.
If you give an asset away then it is normal to consider what the asset is worth not what you get for it. The same is true when you sell it for less than its full worth in order to give away part of the value.
If you dispose of an asset that you had received as a gift then you may have made a gain. When you work out the gain you normally use the market value of the asset when you received it.
If you inherit an asset,
the estate of the person who died does not pay CGT at that time.
If you later dispose of the asset, you work out the gain by looking
at the market value at the time of the death.
Current Allowances
The Annual Exemption Allowance (AEA) is the amount of capital
gains that you can make before paying tax. As an individual, you
can make a capital gain of up to £9,200 in the 2007/08 tax
year before you are liable to pay CGT. Any gain above this limit
is charged at different rates depending on your circumstances.
This is usually at your highest rate of tax. The upper tax limit
is currently 40%.
If the total value of all the assets that you dispose of in a
tax year (ignoring exempt assets) is less than the AEA, then you
will not have to pay CGT on those assets.
Payment of taxes
Payments should be made by 31January during the following tax
year. So any CGT to be paid for the tax year 2007/8 would be due
to be paid before 31 January 2009
THE DIRECT ADVICE TAX GUIDE
Taxes for Individuals
Income Tax - National Insurance - Stamp Duty - Inheritance Tax
Taxes for Businesses
Value Added Tax - Corporation Tax - Capital Gains Tax