Capital Gains is a tax on any gain or profit made usually when an asset is sold.
Typically in the UK if you pay Income Tax on the gain or profit you make from an asset generally you may not have to pay Capital Gains Tax.
Overseas assets may be liable to Capital Gains Tax if your resident in the UK, and you may be liable to gains arising both in and outside the UK. Typically these would include property abroad or shares in a foreign company.
In the UK you do not usually have to pay Capital Gains Tax when you sell your main residence.
Currently the UK Capital Gains Tax regime applies to UK residential individuals or companies, however due to an increasing amount of pressure on the government to deal with tax avoidance they have introduced measures as part of their 2013 Finance Bill to extend the UK Capital Gains Tax regime. Gains made on the disposal of UK residential property by non UK resident non natural persons may now be subject to Capital Gains Tax. Non natural persons will include companies. This is hand in hand with new proposals concerning Stamp Duty Land Tax measures to be introduced for residential properties worth in excess of two million – for further information on the SDLT proposals
For gains made on or before 22 June 2010, Capital Gains Tax is charged at a rate of 18%. From 23 June 2010 onwards, the rates are:
- 18% and 28% for individuals although there is an annual tax-free allowance (the Annual Exempt Amount), which for 2012 to 2013 is £10,600 for individuals and £5,300 for most trustees
- 28% for trustees or personal representatives of someone who has died
- 10% for gains qualifying for Entrepreneurs’ Relief
Entrepreneurs' Relief allows individuals and some trustees to claim relief on qualifying gains. The relief applies for the years 2008-09 onwards. There is a maximum lifetime limit of Entrepreneurs' Relief you can claim. This relief can be made on the disposal of any of the following:
- all or part of a business
- the assets of a business after it has stopped trading
- shares in a company