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Background
You may have to pay Capital Gains Tax if you dispose of an asset (including making a gift) or receive a sum of money in respect of an asset.
You will not have to pay Capital Gains Tax on some assets, for example no tax is normally payable if you sell your only home. Some gifts are not subject to Capital Gains Tax for example most gifts between spouses.
Capital gains tax rules have changed with the intention of “simplification” but since the old rules still apply to assets held for longer periods, the position has in fact become much more complicated
Rates of tax
The rate of capital gains tax will depend on the level of the taxpayers other income. Rates are 10 / 20 or 40%.
The most common assets on which capital gains tax is payable are:-
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Shares
If shares are sold for more than their original cost Capital Gains Tax may be due. The cost may be uplifted by the increase in the Retail Prices Index before 5 April 1998, to reduce the gain. After then, taper relief is available to reduce the taxable gain further.
Second Properties
If you sell a second property, then it is likely that Capital Gains Tax will be due. The same reliefs are available as for shares, but there are also a number of other reliefs available.
North Norfolk Taxation Service recommends that you seek advice before you sell an asset to make sure you will receive all of the allowances to which you are entitled.
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