How much do you know about chargeable assets? Or what a chargeable person is? How about disposals of assets?
Understanding Capital Gains Tax UK can help you navigate this tax in the event you realise a gain or a loss.
Capital Gains Tax UK – Free Download
As well as our video explaining the basics of Capital Gains Tax we’ve prepared a free PDF for you to download. This explains the different types of chargeable assets as well as giving more clarification on what is and isn’t subject to capital gains tax here in the UK.
Capital Gains Tax (CGT) Explained
The first and arguably most important thing to understand with CGT is the terminology used. A CGT arises when a chargeable person, makes a disposal of a chargeable asset. In laymans terms, if you sell an asset at a profit, you could be liable to capitals gain tax. All these terms are simplified and explained in our video below, and our free downloadable guide expands on what falls under the definition of a chargeable asset. A modern example of a chargeable asset are crypto assets.
To provide a simple example, if you bought some listed shares at £1,000 and went on to dispose (sell) them for £50,000, this has yielded a gross profit of £49,000, known as a capital gain. The £49,000 is now subject to capital gains tax, at the current capital gains tax rates after the annual capital gains tax UK allowance has been applied.
And there is a flip side to a capital gain, namely a capital loss. So let’s reverse the scenario above and assume you bought listed shares at £50,000, and unfortunately went on to dispose (sell) of them for £1,000. In reality, this can and does happen, and from a capital gains tax perspective, you have now realised a capital loss. This loss can be utilised to help reduce future CGT liabilities, so it’s not completely wasted.