Capital Gains Tax: What You Need to Know

Understanding Capital Gains Tax

Capital Gains Tax (CGT) is a tax levied on the profit you make when you sell or dispose of an asset that has increased in value. The taxable gain is the difference between the sale price and the purchase price or original value.

Who Pays CGT?

CGT applies to individuals and businesses that dispose of assets, including: * Property * Shares * Investments * Business assets

Tax-Free Allowance

Individuals are entitled to an annual tax-free allowance for capital gains. For the 2024/25 tax year, this allowance is £12,300.

CGT Rates

The rate of CGT you pay depends on your taxable income and the type of asset: * Basic rate: 10% (for gains below the basic rate band) * Higher rate: 20% (for gains above the basic rate band) * Business assets: 20%