Are you liable for Capital Gains Tax?

Are you liable for Capital Gains Tax

You might be if you have sold or transferred (‘disposed of’) a valuable asset that has increased in value, this financial year – including personal possessions, second properties or certain shares.

Remember that you pay CGT on the gain you have made from selling the asset, not the amount you sold it for.

The CGT Annual Exemption (AE) is currently £6,000 for most assets and £3,000 for trusts, meaning you can make a gain of up to this amount without being subject to CGT.

If you haven’t used all of your CGT AE for the 2023/24 financial year, this might be the perfect time to bring any upcoming sales forward to avoid unnecessary spending on tax. This is especially true as the main CGT AE is due to fall to just £3,000 from 6 April 2024.

Everything may depend on whether you plan to sell any other assets in the next financial year which may take you over the threshold.

If you are required to pay CGT on a regular asset it will be at a rate of either 10 per cent or 20 per cent (depending on whether you are a basic or higher/additional rate taxpayer).

If you make a gain on property these rates increase to 18 per cent or 28 per cent respectively.

If you do make a gain on a second property, you must report and pay CGT within 60 days of completion or face a penalty.