If you make a profit selling an asset you own, you might incur Capital Gains Tax. If the item in question has increased in value, you may be taxed on the increase, not the full sales value. There are many different rules for different classes of items, such as property, shares, etc. In this post, we’re giving a general overview. We will look into Capital Gains Tax for some specialised issues such as property or inheritance in future blog posts.
Current tax-free allowances
- For the tax year 2018/19, if your gains were less than £11,700 you were exempt from paying CGT.
- For 2019/20 the tax-free amount is £12,000.
Any amount of gain above this allowance is taxable at a rate
between 10% – 28% depending on the type of gain.
Capital Gains Tax is due at the same time as your income tax. However, this is changing for certain property transactions from next year.
When do you have to pay Capital Gains Tax?
Capital Gains Tax does not only come into effect when you sell an item, but also if you
- Give it away as a gift
- Swap it for something else or
- Get compensation for it, such as through an insurance claim
There is, however, tax relief available for some forms of gifts. If you would like to know more about this particular topic, please do not hesitate to get in touch.
Giving assets as gifts to your spouse is tax free. This also applies to civil partnerships. You do, however, have to pay tax if you are separated at the time or gave them the item to sell as part of their business. If your spouse decides to sell the item later on, they need to pay tax on any gains made since the item was first owned by either you or them.
If you donate an item to charity, there is no tax to pay.
How Alba Financial Accounts can help
If you are unsure whether an item you are intending to sell, swap or give away is subject to Capital Gains Tax, please get in touch. We can advise, taking your particular circumstances into account. We can help you to understand any tax implications your financial decisions may have.
You can reach us via email at admin@alba.uk.com or call us on 01509 853779.