capital gains tax

Capital Gains Tax
(CGT) When you sell a capital asset such as a property or shares, the profit is treated as a capital gain rather than income and is subject to Capital Gains Tax. This is the difference between the base cost (i.e. the acquisition cost) and the value realised on disposal. Capital Gains Tax is charged at 40 per cent of the amount of the gain. In the period to 4 April 1998 the amount of the gain was reduced by indexation allowances. For disposals after 5 April 1998 there is to be a taper which will reduce the gain according to the length of time the asset has been held after 5 April 1998. The taper relief is more generous for business assets. Capital losses may be offset against gains and individuals have an annual exemption (₤7,200 for 2000/1).

Easyform Glossary of Law Terms. — UK law terms.


capital gains tax
a tax charged on gains of a capital nature. More specifically, the charge to capital gains tax is on chargeable gains; these are gains accruing from the chargeable disposal of chargeable assets by chargeable persons. It follows from this that some disposals are chargeable disposals while others (such as a disposal on death by a testator to his executors) are not; likewise, some assets are chargeable and others are not (e.g. cash), and some persons are chargeable persons and others not (e.g. charitable trustees). Chargeable gains made by companies otherwise than in a fiduciary capacity are charged to corporation tax rather than capital gains tax. The current law has been consolidated into the Taxation of Chargeable Gains Act 1992.

Collins dictionary of law. . 2001.


capital gains tax
capital gains tax (CGT)
A tax on any chargeable gains made on the disposal or deemed disposal of capital assets by individuals, personal representatives and trustees in a year of assessment (which is a year ending on 5 April).
Related links

Practical Law Dictionary. Glossary of UK, US and international legal terms. . 2010.

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