Capital Gains Tax (CGT)

CGT is a tax on capital ‘gains’. If when you sell or give away an asset it has increased in value, you may be taxable on the ‘gain’ (profit). You are liable to pay tax on the total chargeable gains arising on disposals you make in any one tax year (after various reliefs have been given) in excess of the annual exemption limit.

If you make a loss you may be able to make a claim for that loss and deduct it from other gains, but only if the asset normally attracts CGT.

If you think that you might have losses that are greater than your gains for the year, then you should find out more about CGT. If you notify your Tax Office you may be able to use the losses to offset gains in a future year.

CGT is charged on the total of your taxable gains, after taking into account:

• certain costs and reliefs that can reduce or defer gains
• allowable losses you have made on assets to which normally CGT applies
• the annual exempt (tax-free) amount - this is £9,600 for every individual in the tax year 2008-2009

CGT is potentially complex. If you have any uncertainties regarding the current requirements, you should consult an appropriate financial adviser or the Inland Revenue who produces a range of guidance booklets.