Capital Gain Tax (CGT) is a tax, that is charged if you sale, exchange, give away or otherwise dispose of an asset and realize gain on it. It is the amount of money that, you receive over and above actual cost of the asset. In other words, in order to calculate capital gain, you will be comparing the amount of sale (or market value of asset when it was disposed of) with the cost of asset that been pain at the time of purchase of asset (or market value when asst was purchased).
In addition to above, you may be liable to calculate and pay capital gain tax on assets disposed-off which are located outside UK. Like-wise, non-residents are subject to capital gain tax, if they are carrying out business in the UK. There are separate rules of capital gain tax that apply to individuals who are normally resident of UK but are temporarily resident outside the UK i.e. who are non-resident for less than five years. Disposal of assets by the way of gift or other-wise is also subject to capital gain tax. However, it depends upon the way of disposal of asset i.e. giving away the asset as gift, transfer assets on dissolution of a civil partnership, divorce or separation etc. Definition of disposal is broader than you think of it. For example if a precious possession has been destroyed for any reason and you receive some amount like insurance by way of compensation.
CGT on inherited assets
Capital gain tax is always applied when you realize gain at the time of sale of asset. In case of inherited assets, you shall be required to pay CGT when you sell or otherwise dispose-off the asset you inherited. In this scenario capital gain shall be the increase amount from the date of the deceased person’s death and the date when dispose of asset take place.
How we can help?
Insights can help with the calculation of capital gain tax. We have Capital Gain Tax accounting expert, who can provide you comprehensive & tailored tax advice on your personal tax situation and assist you with your tax return filing.