Capital Gains Tax
The Basics
Capital gains tax (CGT) has a nasty habit of landing investors with a hefty bill when least expected, so it pays to be prepared for any liability you may face.
This tax is levied on money made from the sale of most assets other than your main home, so includes buy-to-let property - but some people are too busy celebrating their profits to consider its impact.
Yet it will contribute around £5 billion to government coffers in 2008 / 09 (Source: Budget 2008), so is not a tax to be sniffed at. This sum has been aided by soaring property prices over the past ten years which have outstripped any reliefs and allowances available to investors.
There are some exceptions to CGT and items such as cars and personal possessions up to £6,000 will not be liable. Gains on assets free of CGT include:
- Your main residence
- Government securities
- Qualifying corporate bonds
- National Savings certificates
- Individual Savings Accounts (ISAs)
- Life assurance policies
- Betting and lottery wins
- Compensation or damage awards
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