Capital Gains Explained

Capital Gains Tax: what you pay it on, rates and allowances

Capital Gains Tax is a tax on the profit when you sell (or ‘dispose of’) something (an ‘asset’) that’s increased in value.
It’s the gain you make that’s taxed, not the amount of money you receive. For example, if you bought a painting for £5,000 and sold it later for £25,000, you’ve made a gain of £20,000 (£25,000 minus £5,000).
Some assets are tax-free. You also do not have to pay Capital Gains Tax if all your gains in a year are under your tax-free allowance.
If you sold a UK residential property on or after 6 April 2020 and you have tax on gains to pay, you can report and pay using a Capital Gains Tax on UK property account.

Capital Gains Tax allowances:

You only have to pay Capital Gains Tax on your overall gains above your tax-free allowance (called the Annual Exempt Amount).
The Capital Gains tax-free allowance is:

- £3,000
- £1,500 for trusts