Capital Gains Tax is the tax you pay on the profit you make when you sell (or ‘dispose of’) something (an ‘asset’) that has increased in value since you acquired it.
It’s the gain you make that’s taxed, not the total amount of money you receive. For example, if you bought a painting for £5,000 and sold it later for £25,000, you’ve made a gain of £20,000 (£25,000 minus £5,000), so the Capital Gains Tax is due on the £20,000 gain after taking account of any available tax-free allowance and capital losses.

For Capital Gains Tax purposes, disposing of an asset includes:
• Selling it
• Giving it away as a gift
• Swapping it for something else
• Getting compensations such as an insurance payout if it’s been lost, stolen or destroyed.

CGT has to be paid on the gain when you sell or dispose of:

• Personal possessions worth £6,000 (excluding your car)
• Residential Property that’s not your main home
• Commercial Property
• Shares that are not held within a tax-free wrapper (i.e. an ISA)
• Business assets including land, buildings, plant and machinery, fixtures and fittings, trademarks and business reputation.

These are called ‘chargeable assets’.

Capital Gains Tax can also be due even if your asset is overseas or if you’re a UK resident but your permanent home is outside the UK.

If all your gains in a year are under your tax-free allowance then no Capital Gains Tax is due.

Depending on the asset, you may be able to reduce the amount of tax you need to pay by claiming tax relief such as Business Asset Disposal Relief, Hold-over Relief, Roll-over Relief, Private Residence Relief, Incorporation Relief and more.

• The deadline for reporting and paying tax on the disposal of a UK Residential Property is 60 Days from the date of completion.
• The deadline for the reporting and paying of capital gains tax on all other assets is 31 January following the tax year of disposal.