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Capital Gains Tax (CGT)
Capital gains on disposals of assets may be subject to UK tax.
CGT is charged on net gains meaning you can offset any loss for
the period you are calculating.
Companies are subject to corporation tax on chargeable gains calculated
according to modified CGT rules.
Disposal of Assets
CGT can only arise on the disposal of an asset. Normally this means
sale, but it could also mean a gift or compensation for loss or
damage to an asset.
- The value on which the gain (or loss) is based is normally
the consideration received. However, on a gift or on certain sales,
the open market value is used instead.
- For assets acquired before March 31st 1982, the acquisition
value is normally replaced by the March 31st 1982 value.
- No CGT is payable on death. However, the beneficiaries of a
deceased person's estate are treated as if they had acquired the
assets of the deceased at their market value on death.
Deductions
Certain costs are allowable in computing chargeable gains:
- The acquisition cost or market value on March 31st 1982 (if
the asset was acquired before that date).
- Costs of acquiring and disposing of the asset.
- Expenditure on enhancing the asset's value.
- Indexation allowance.
Losses
Losses brought forward from previous tax years can offset gains.
For individual taxpayers, such losses do not reduce net gains below
£7,100, so the annual exemption is not wasted.
Rate of Tax
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Annual Exempt Amount
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2007 - 2008
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2006 - 2007
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Individuals
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£9,200
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£8,800
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Husbands and wives are subject to CGT separately, each with their
own annual exemption and tax rates: transfers between spouses are
not liable to CGT.
For more information.
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