Introduction to capital gains tax

By Tolley
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The following Personal Tax guidance note by Tolley provides comprehensive and up to date tax information covering:

  • Introduction to capital gains tax
  • Chargeable person
  • Chargeable disposal
  • Chargeable assets
  • Date of disposal
  • Annual exempt amount
  • Reporting
  • Calculation of capital gains tax liability
  • Due date for tax payment
  • Overseas aspects

In general terms, a charge to capital gains tax arises when a chargeable person makes a chargeable disposal of a chargeable asset. The disposal may produce a profit (known as a gain) or a loss.

 

In general terms, a charge to capital gains tax arises when a chargeable person makes a chargeable disposal of a chargeable asset. The disposal may produce a profit (known as a gain) or a loss.

See Checklist ― calculation of capital gains and losses for issues to consider when reporting client gains and losses.

When considering the guidance below, note that the Chancellor announced at Autumn Budget 2017 that from April 2020 a payment on account of any CGT due on the disposal of residential property must be made within 30 days of completion. This had been expected to be effective from April 2019, but has been delayed by 12 months.

Overview of tax legislation and rates  (Nov 2017), para 2.34; Consultation: Payment window for residential property gains 

Since 2016, it has been possible for taxpayers to voluntarily report  a capital gain straight away via an online submission called the Real Time Transaction Tax Return. The tax can also be paid at the same time. However, this is aimed at taxpayers who do not submit Tax Returns annually and so can use the facility to avoid the need to complete a Tax Return to report the gain. This is discussed in more detail under ‘Reporting’ below.

Chargeable person

A chargeable person could be an individual, a trustee, a personal representative or a company (although companies are subject to corporation tax on chargeable gains not capital gains tax). For further discussion, see CG10700.

TCGA 1992, s 1

Exempt persons include, amongst others, charities and local authorities, see CG10760.

Generally, if an individual is resident in the UK in the tax year he is chargeable to tax on capital gains arising in that tax year. See ‘Overseas aspects’ below for a discussion on the taxation of gains on non-resident individuals and those accessing the remittance basis

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