Capital Gains Tax (CGT)

CGT is a tax on capital ‘gains’. If when you sell or give away an asset it has increased in value, you may be taxable on the ‘gain’ (profit). You are liable to pay tax on the total chargeable gains arising on disposals you make in any one tax year (after various reliefs have been given) in excess of the annual exemption limit.

If you make a loss you may be able to make a claim for that loss and deduct it from other gains, but only if the asset normally attracts CGT.

If you think that you might have losses that are greater than your gains for the year, then you should find out more about CGT. If you notify your Tax Office you may be able to use the losses to offset gains in a future year.

Some reliefs are available to many people. For example, taper relief reduces the amount of a gain charged to tax the longer an asset has been held. For example, only 60% of any gain on shares held for 10 complete years or more, at the date of disposal, will be taxable.

The annual exemption limit for CGT for UK-resident individuals for the tax year 2005-06 is £8,500.

CGT is potentially complex. If you have any uncertainties regarding the current requirements, you should consult an appropriate financial adviser or the Inland Revenue who produces a range of guidance booklets.