Capital Gains Tax :Cross Stitch – Money, tax and benefits

Capital Gains Tax is a tax on capital ‘gains’. If, when you sell or give away an asset it has increased in value, you may be taxable on the ‘gain’ (profit). This doesn’t apply when you sell personal belongings worth £6,000 or less or, in most cases, your main home.

You may have to pay Capital Gains Tax if, for example, you:

• sell, give away, exchange or otherwise dispose of (cease to own) an asset or part of an asset
• receive money from an asset – for example compensation for a damaged asset

You don’t have to pay Capital Gains Tax on:

• your car
• your main home – provided certain conditions are met
• ISAs or PEPs
• UK government gilts (bonds)
• personal belongings worth £6,000 or less when you sell them
• betting, lottery or pools winnings
• money which forms part of your income for Income Tax purposes

These are some points to bear in mind:

• if you are married or in a civil partnership and living together you can transfer assets to your husband, wife or civil partner without having to pay Capital Gains Tax
• you can’t give assets to your children or others or sell assets cheaply without having to consider Capital Gains Tax
• if you make a loss you may be able to make a claim for that loss and deduct it from other gains, but only if the asset normally attracts Capital Gains Tax – for example you cannot set a loss on selling your car against gains from disposing of other assets
• if someone dies and leaves their belongings to their beneficiaries, there is no Capital Gains Tax to pay at that time – however if an asset is later disposed of by a beneficiary, any Capital Gains Tax they may have to pay will be based on the difference between the market value at the time of death and the value at the time of disposal

Provided by HM Revenue and Customs