What is my “capital gains tax allowance”?
It is an annual allowance that allows you to realise gains on your investments of up to 9, 200 for the 2007/08 tax year. To “realise” a gain you must actually sell the investment concerned, so it may not be practical to use this allowance unless you are actually intending to sell the investment anyway. Nonetheless, careful use of this allowance over time could potentially reap significant tax savings. Gains in excess of the allowance are liable to tax at your highest income tax rate, although you can benefit from “Taper Relief” which reduces the tax payable the longer the investment has been held.
