The chargeable gains of the tax year, after deduction of capital losses, available reliefs and the annual exemption, are taxed at 18% (basic rate income tax payers) or 28% (taxable income and gains exceed £35,000). CGT is self-assessed, reported and paid in conjunction with income tax and the details are given in Personal Taxation.
When a chargeable asset is given away, the doner is treated as receiving the full market value and is liable for CGT accordingly. However, there is no charge on disposal to husband/wife/registered civil partner.
Disposals of the following assets may qualify for ER if they have been owned for at least a year:
- a business or an interest in a business.
- shares in a trading company for which the individual works and holds 5% of the share capital.
- related assets used in the business/company and sold at the same time as the interest in the business/shares.
An individual will qualify for relief on all disposals until the lifetime total of such gains reaches £10m. The first £10m of gains will be charged to CGT at 10% instead of 18% or 28%
Other major CGT reliefs
A number of types of asset are exempt from CGT, including chattels (tangible
movable property) which are bought and sold for less than £6,000; cars; and
the taxpayer's only or main residence. A taxpayer with more than one residence
can choose which is to be exempt, but it is not possible to apply the exemption to an investment property
which is rented out and has never been occupied by the owner.
Gifts to charity are not charged to CGT, and gifts of quoted shares and land
also enjoy an income tax relief (see Personal Taxation).
Deferral of gains is allowed on some types of reinvestment, such as
subscription for new EIS shares (see Investment Reliefs).
There is no CGT on transfers between spouses or registered civil partners, whether gifts or for consideration. The transferee takes over the transferor's CGT cost.
There is no CGT on gains accrued to the date of a taxpayer's death. Instead, the value of the estate may be subject to Inheritance Tax