Capital Gains Tax
1. Introduction <Answer> The idea behind Capital Gains Tax ('CGT') is to tax
the profit that a person might make from disposing of a capital asset which has
appreciated (increased) in value during their period of ownership.
CGT is charged where there is
- a Chargeable Disposal
- of a Chargeable Asset
- by a Chargeable Person
- which gives rise to a Chargeable Gain
CGT is charged on all gains made in the relevant tax year (ie 6 April to 5 April).
The tax is payable on or before 31 January following the tax year in which the
disposal occurs. This is the same date as for the final payment (or refund) of income
tax for the year.
2. Chargeable Disposal <Answer> The two main instances of disposal are as
follows
1. the sale of an asset; and
2. the gift of an asset during the taxpayer's lifetime.
There is no chargeable disposal on death. The personal representatives of thede-
ceased'sestatearedeemedtoacquiretheestateatitsthenmarketvalue. Thisis common-
ly known as 'a free uplift on death'.
3. Chargeable Asset <Answer> All forms of property are included in the
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, definition of asset unless they are specifically excluded. The main types of asset
excluded from CGT are <Answer>
1. Principal private residence ('PPR') <Answer> an individual can claim the
benefit of this exemption from CGT if they have occupied the PPR as their only or
main residence during the whole period of ownership, though the individual also
has a valuable exemption in respect of the last 18 months of ownership even if
they were not in actual occupation. In cases where an individual owns more than
one home it is
a questionoffactastowhichoftheresidencesisthePPR. Amarriedcouplecanonly have
one PPR between them <Answer> they cannot each have a different principal
place of residence (unless separated);
2. Motor cars for private use, including vintage cars;
3. Certain investments, such as government securities, National Savingscertificates,
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1. Introduction <Answer> The idea behind Capital Gains Tax ('CGT') is to tax
the profit that a person might make from disposing of a capital asset which has
appreciated (increased) in value during their period of ownership.
CGT is charged where there is
- a Chargeable Disposal
- of a Chargeable Asset
- by a Chargeable Person
- which gives rise to a Chargeable Gain
CGT is charged on all gains made in the relevant tax year (ie 6 April to 5 April).
The tax is payable on or before 31 January following the tax year in which the
disposal occurs. This is the same date as for the final payment (or refund) of income
tax for the year.
2. Chargeable Disposal <Answer> The two main instances of disposal are as
follows
1. the sale of an asset; and
2. the gift of an asset during the taxpayer's lifetime.
There is no chargeable disposal on death. The personal representatives of thede-
ceased'sestatearedeemedtoacquiretheestateatitsthenmarketvalue. Thisis common-
ly known as 'a free uplift on death'.
3. Chargeable Asset <Answer> All forms of property are included in the
1/
15
, definition of asset unless they are specifically excluded. The main types of asset
excluded from CGT are <Answer>
1. Principal private residence ('PPR') <Answer> an individual can claim the
benefit of this exemption from CGT if they have occupied the PPR as their only or
main residence during the whole period of ownership, though the individual also
has a valuable exemption in respect of the last 18 months of ownership even if
they were not in actual occupation. In cases where an individual owns more than
one home it is
a questionoffactastowhichoftheresidencesisthePPR. Amarriedcouplecanonly have
one PPR between them <Answer> they cannot each have a different principal
place of residence (unless separated);
2. Motor cars for private use, including vintage cars;
3. Certain investments, such as government securities, National Savingscertificates,
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15
