(Capital Gains Tax)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 (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. www.practicallaw.com. 2010.