What is Capital Gains Tax?

Capital Gains Tax
Capital Gains Tax (CGT) is a tax on the profit you make when you sell something that has increased in value. Capital Gains Tax is due on the profit only, not the total amount you receive.

If you’re self-employed or in a business partnership you have to pay Capital Gains Tax on any profit you make through the sale of a business asset such as land and buildings, machinery, fixtures, fittings and registered trademarks.

Usually, this is simply the difference between what you paid for the asset and what you sold it for. However there are times when you use the market value instead such as if you gave the asset away (unless it was to a spouse, civil partner or charity), sold it for less than it was worth or inherited it.

Limited companies don’t pay Capital Gains Tax. They pay Corporation Tax on any profit they make from selling or disposing of a business asset. Also, Capital Gains Tax is not normally due on gifts to your spouse, civil partner or charity.

You may be able to reduce the Capital Gains Tax you owe by deducting any costs you incur such as advertising or valuation fees, Stamp Duty or VAT. You may also reduce CGT if you are eligible for tax relief.

How to calculate Capital Gains Tax

CGT is calculated through your Self Assessment Tax Return. If you’re signed up with Numberworx your bookkeeper will calculate your tax return and let you know if you have Capital Gains Tax to pay, and why

Your questions answered

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