Capital Gains Tax (CGT) is not a tax everyone is familiar with. If you keep your investments within a pension, or an ISA (Individual Savings Account), or your cash within a bank account then CGT will never bother you.
For many people the first experience of CGT is if they sell a second home, or a residential property they do not live in, in which case you have just 60 days to calculate and pay the tax due on any profits from ownership of that property.
CGT applies to the sale of any asset which is not exempt, where a profit has been made. It generally makes no allowance for inflation, although you can usually claim any expenses related to the buying, selling, or improving, and sometimes maintenance and protection of the asset along the way. It is only levied on the profit, which is the value realised from a sale, minus the cost of acquiring the asset.
Rates are 0%, 10%, 18%, 20%, or 28%, depending on what the asset is, how much capital gain you’ve made, and what your other tax paying status is.
Which is to say the CGT can get complicated!
There are many ways to mitigate the effect of CGT on your tax position, and in this article we explore some of these, how much of an impact they can have, and how effective they might be. To read more download the article.