Capital gains tax, or CGT as it is often called, is a tax on gains made from capital. This means that when you sell or give away an asset that has increased in value, you may have to pay tax on the profit you make.
You do not have to pay CGT on personal belongings you sell that are worth less than a certain threshold, your main home, your car, ISAs, PEPs, UK Government bonds, or pools, lottery or betting winnings.
You may have to pay CGT if you:
• Sell, give away or exchange an asset or part of an asset.
• Receive money from an asset, such as compensation for a damaged asset.
If a loved one dies and leaves their belongings to their beneficiaries, there is no CGT to pay at that time but if an asset is later disposed of by a beneficiary, any CGT they may have to pay will be based on the difference between the market value at the time of death and the value at the time of disposal.
Capital gains tax is worked out for each tax year and is charged on the total of your taxable gains, after taking into account: