It’s easy to believe Capital Gains Tax (CGT) is a tax that only the wealthiest investors pay but, in fact, HM Revenue and Customs raises more money from it than from Inheritance Tax – over £7 billion in the last tax year1. If you sell any investments that were not held in a pension fund or an ISA, you could be liable for CGT on the profits you earned. The same goes for sales of buy-to-let property or, indeed, any property which is not your main residence. If you sell valuable belongings such as artworks, jewellery or furniture for £6,000 or more, those gains too might be liable to CGT.
Every individual can take the first £11,100 of any gains in the current tax year tax-free. If your spouse is not using their allowance, you can transfer assets to him or her – a procedure that is not treated as a sale and so is not subject to CGT. If you both then sell assets before the end of the tax year, you can effectively double the allowance to £22,200. This is a case of ‘use it or lose it’ – if you don’t exploit the allowance this year, it doesn’t roll over and is lost forever.
The levels and bases of taxation, and reliefs from taxation, can change at any time. The value of any tax relief depends on individual circumstances.
1 HMRC, November 2016