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Capital Gains Tax Rules For The UK
November 30, 2004
By Srinidhi Goenka
Capital Gain Taxes are charged on the total gains
made by an individual after reducing the net losses
in a fiscal year. The same tax is charged to companies
under the name of corporation tax. Mostly, this form
of tax is charged on profits made by the sale or disposal
of an asset. Capital gains tax in the UK is
bound by certain specific rules and regulations.
Before we go into the detail of these rules, it is
important to understand the kind of assets or capital
which is taxable.
The most commonly taxed assets include shares in a company, units
in a unit trust, land and buildings, high value items such as jewellery,
paintings, antiques etc., gifts, and assets used in a business.
All these rules do not apply to acquisitions which are made due
to the death of a person.
One more important thing is that this tax is charged only on the
"gain" made, for example, if the asset is valued at GBP
5,000 and you purchased it for GBP 3,000, then the tax will be levied
on GBP 2,000 (GBP 5,000 less GBP 3,000 = Gain of GBP 2,000).
Tax Rules In The UK
Some of the key capital tax rules in the UK are explained here :
· In the UK, the minimum cutoff amount to apply tax is
GBP 8,200 for an individual. Gains made below this amount are
free from tax.
· Gains made above GBP 8,200 are taxed at the rates which
are applied to savings income i.e. 10% on the first £2,020,
20% on the next £29,380 and 40% on the remaining balance.
· The assets of husbands and wives are charged separately,
based on individual annual exemption and tax rates. However, any
transfers made between spouses are exempted from the tax.
· The tax is levied irrespective of the fact that the asset
is situated in the UK or abroad.
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