Learn More About the Capital Gains Tax in the United Kingdom and Transact Worry-free

Capital Gains Tax in the United Kingdom Thinking of selling your asset(s)? You would be right to assume that taxes would be involved. It is important to be absolutely sure that whenever a transaction of properties occurs, it is done with proper care and in compliance with statutory requirements. Capital Gains Tax, though lesser-known, is nevertheless an important component, especially when the context of your transaction necessitates it. Learn more about the Capital Gains Tax in the United Kingdom and transact worry-free.


What Is Capital Gains Tax in the United Kingdom?

Assume you wanted to sell off an asset of yours at a price higher than the figure you first acquired. Say a house you are selling for five million, and you initially bought that said house for only one million. So, in the calculation, five million minus one million equals four million, which is the amount you profit off in the sale of your five million properties. Therefore, in essence, the four million profit is taxed, and this is known as the Capital Gains Tax.

This tax is imposed on personal possessions of a certain value, property other than your primary home, shares and business assets. Whether you need to pay or otherwise is reliant on the fact that if the gain/profit exceeds the annual tax-free allowance. In many instances, tax is not applicable when you dispose of your assets to a family member. If you indeed have exceeded the allowance, then your gains are taxable though in some cases, there are exceptions.


When Is This Tax Applied?

The following are some of the most common instances where this tax is imposed. The following is also described as disposing of assets.

  • Through the sale of an asset.
  • Giving away as a gift.
  • Transferring an asset to another party.
  • Swapping assets.
  • From compensations, usually from insurance.


Steps in Working Out if You Need to Pay

Here are some steps that can be taken to ascertain if you are indeed taxable.

  • Refer to your records.
    If you have a record of all the assets that you have disposed of, now would be an excellent time to refer.
  • Calculate.
    Calculate the collective value of the assets that you have disposed of within that tax year. A tax year begins from 6th April of the current year to the following year’s 5th April. You may calculate manually or with the virtual assistance of the non-resident Capital Gains Tax Calculator.
  • Allowable losses.
    Deduct all allowable losses and understand what entails such allowance.


What is the Capital Gains Tax Allowance Rate?

You are taxable only if the value of gains is above the Capital Gains Tax Allowance.


Things You Should Know:

Here is some information that you may find to be useful:

  • There is a Penalty.
    Late filing will result in penalties, and it depends on how long overdue you are. Overdue more than 12 months can incur a penalty of £300 or 5% of any tax due, whichever greater.
  • Non-residents.
    Non-residents are also taxable, but the calculation varies to an extent. For more information, check-in with the relevant authorities.

Capital Gains Tax in the United Kingdom