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CGT - 10 things to know with detail

• CGT stands for Capital Gains Tax, which is a tax levied on the profits made from the sale of assets such as property, shares, and other investments.
• The rate of CGT can vary depending on your income tax bracket and the type of asset being sold. In general, individuals are taxed at a rate of 10% or 20% on their capital gains.
• There is an annual tax-free allowance for CGT, known as the Annual Exempt Amount. For the tax year 2021/22, this allowance is £12,300 for individuals and £6,150 for trusts.
• CGT is typically only payable on gains above the Annual Exempt Amount. For example, if you make a profit of £20,000 from selling shares, you would only pay CGT on the £7,700 that exceeds the annual allowance.
• Certain assets are exempt from CGT, such as your primary residence, personal possessions worth less than £6,000, and winnings from betting or lottery.
• CGT can be reduced or deferred through various tax planning strategies, such as transferring assets between spouses or using tax-efficient investment vehicles like ISAs or pensions.
• When calculating your capital gains, you can deduct certain costs associated with buying, selling, or improving the asset. This can include legal fees, stamp duty, and renovation expenses.
• If you make a loss on the sale of an asset, you can offset this against any other gains made in the same tax year or carry it forward to future years.
• Different rules apply to CGT on assets held in a business or held by non-UK residents. It's important to seek professional advice if you have complex tax affairs.
• CGT is a complex area of taxation, and it's important to keep accurate records of your capital gains and losses to ensure you are paying the correct amount of tax. If you're unsure about your CGT liability, consider speaking to a tax advisor or accountant for guidance.