1. Overview

Capital Gains Tax is a tax on the profit when you sell or give away something (an ‘asset’) that has increased in value.

It’s the gain you make that’s taxed, not the amount of money you receive.

You don’t normally have to pay Capital Gains Tax if you give something away to your spouse or civil partner.

Example

You bought some shares for £2,500 and sold them later for £12,500. This means you made a gain of £10,000 (£12,500 less £2,500).

If you gave the shares to a friend when they were worth £12,500 instead of selling them, the gain would still be £10,000.

Current rate of Capital Gains Tax

The current rates are:

The rates will be the same for the 2014 to 2015 tax year.

For gains made on or before 22 June 2010, Capital Gains Tax is charged at a rate of 18%.

When you don’t pay Capital Gains Tax

Capital Gains Tax doesn’t apply to personal belongings worth £6,000 or less.

You won’t usually have to pay it if you sell your main home, because of Private Residence Relief.

There’s also an annual tax-free allowance (the Annual Exempt Amount):

Tax year Rate Who the rate applies to
2012 to 2013 £10,600 Individuals
2012 to 2013 £5,300 Most trustees
2013 to 2014 £10,900 Individuals
2013 to 2014 £5,450 Most trustees

You don’t have to pay Capital Gains Tax if your overall gains are below the allowance for the right tax year.

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