What Assets and Wealth Do You Pay Capital Gains Tax On?

Not A Sales Tax

Capital Gains Tax (CGT) is payable when you sell or dispose of an asset for money or money’s worth and have made a gain/profit.  This means you do not have to sell an asset for a profit, it means CGT may be payable when you dispose of it either on sale or if you give it away.  For example, if you sell shares of a 2^nd property, CGT may be payable if the asset has grown in value.  Equally, if you dispose of the asset by gifting it to your children and its value at the time of the gift was more than you paid for it, CGT may be payable.

When is CGT Not Payable?

• When you make gifts of assets to your legally married spouse or civil partner or a charity.
• When no financial value gains have been made or you have made a loss.  These losses can be carried forward and offset against future gains in the same asset class.
• When you dispose of your main residential home.
• When you dispose of personal possessions below £6,000 in value.
• When you dispose of assets and realise gains inside ISAs and Pension Funds.
• When you dispose of gilts and premium bonds.
• Your winnings from gambling, lotteries and the ‘pools’.
• When you die, no CGT is payable as inheritance tax may be payable.  Beneficiaries may suffer CGT if they keep assets passed on to them and then they make gains before disposing of the asset.
• When total gains on assets disposed of during the year are below the £3,000 pa capital gains tax allowance.

What is CGT Payable On?

• When you dispose of personal possessions worth over £6,000 excluding cars.
• When you dispose of property which is not your main residential home.
• When you dispose of a larger property and land that is your main home and is over 5,000m² (approximately 1 acre).
• When you dispose of your main residential home and part of the property has been used for business or you have leased part of the property for non-residential reasons.
• When you dispose of shares and share related investments and funds not inside ISA or Pension funds.
• Full rates of CGT are payable when you dispose of business assets where the value is over and above Business Asset Disposal Relief where accumulated business interest disposals exceed £1m.  Cumulative business interest disposals below £1m are subject a reduced rate of CGT at 14%.
• When you dispose of cryptocurrency assets.

Cryptoassets Disposal CGT is different CGT on Crypto

Also, see The Start and History of CGT Budget and CGT History

Overseas Assets and Live in UK

• If you are UK resident and the UK is your permanent home, disposal of overseas/worldwide assets are treated and taxed in the UK in the same was as UK assets, so all the CGT rules above apply.
• If you are UK resident but the UK is not your permanent home, then you may secure Foreign Income and Gains Relief (FIG) for the first 4 years of UK residency (provided you have not been UK resident for the last 10 years). 

SEE Budget 24 Long Term Resident

If You Live Overseas

• When you dispose of UK property you are subject to CGT in the UK even though you do not live in the UK.
• When you dispose of other UK assets and shares you are not subject to CGT in the UK unless:
• You return to the UK within 5 years.
• You sell shares in a UK company that is ‘property rich’ i.e.  75% or more of company assets are in UK property/land (the company is technically an investment company and not a commercially trading business).

Capital Gains Tax Rates

• Capital gains tax rates are 18% for basic rate taxpayers and 24% for higher rate taxpayers for non-residential property gains.
• Capital gains tax rates are 18% for basic rate taxpayers and held at 24% for higher rate taxpayers on residential property gains.
• Business Asset Disposal Relief rates are 14% for accumulated business sale values under £1m and normal rates in excess of £1m cumulatively.

See History of Capital Gains Tax Budget and CGT History

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