What is capital gains tax or CGT?
You make a ‘capital gain’ if you sell assets such as shares or property for more than they cost you. Each tax year you are allowed to make gains up to a certain amount without paying any tax. For the 2008/9 tax year this figure is £9,600. Everyone has their own individual allowance so it may be possible for couples to make a combined gain of £19,200 before they have to pay the tax – although each individual’s circumstances are considered separately. As announced by the government in the Pre-Budget Report in October 2007, from 6 April this year, anything cashed in above this threshold, will be subject to tax at 18%. Some gains you make from cashing in investments are exempt from CGT altogether. These include gains from the sale of your car and the sale of your home provided certain conditions are met.
