CGt or Capital Gains tax is levied when you sell an investment or asset and make a gain or a return. CGT is payable on the profit you make on the sale not the original investment amount. The sale of your personal possessions such as your car , main home , jewellery are usually free from capital gains tax. It is possible to work out your liability to capital gains tax , but we would recommend that you seek impartial and professional advice.

You work out your Capital gains tax for each tax year. The tax year in the UK runs from the 6th April to the 5th April each year. The tax is applicable to your total gains, but you must take into account:

The reduction of any gain by taking into account costs and relief’s. By using costs and reliefs you will be able to reduce the amount of tax you pay.

Allowable losses you have made on assets to which typically CGT applies.

The annual exempt (tax-free) amount is actually 10,100 each individual in 2010/11. In the event your gains (profit) arrive at greater than your allowance, you have to pay tax only for the excess over the tax-free limit. Currently, their are two different rates of CGT.. If your gain takes you over the tax threshold, you pay the higher rate.

CGt is not applicable on your principle private residence. However if you let out part of your house or run a business from home then you could be partially liable to capital gains tax

If you run you own company you might be able to sell it in the future and pay a substantially reduce amount of capital gains tax. Other investments including individual savings accounts, NS and I investments and your personal belongings are also free from CGT

If you prefer not to pay any capital gains tax straight away, you might be able to defer the tax by using certain alternative investments such as EIS schemes.

Learn more about capital gains tax. Stop by Graham Brian Bond’s site where you can find out all about our Capital Gains Tax Calculator and what it can do for you.