Capital gains tax (CGT)
If you sell an asset for more than it cost, you may be liable for capital gains tax (CGT). However, you will not be liable for tax on all the difference between the purchase price and the sale value.
- For a start you can deduct various expenses (e.g. stamp duty and brokers’ fees).
- Second, against the gain you can set capital losses on other assets made in the same year (or carried forward from an earlier year).
- Third, and perhaps most importantly, you are permitted to make annual gains of £10,600 (in 2012–13) tax free (called an annual exempt amount) – so you only pay tax on gains made above this figure.
Basic rate taxpayers pay CGT at 18%, but higher rate taxpayers are charged at 28% on any gains that push them into ...