Capital Gains Tax
Capital gains tax is a tax on money made from selling possessions that have increased in value, and thus resulted in "capital gains". It is charged when someone sells or gives away something that has increased in value since it came into their possession.
Capital gains tax does not apply to personal belongings worth £6,000 or less or, generally, when you sell your main home. It is also liable if someone sells or otherwise disposes of a share of an asset, or receives money for it – i.e. an insurance payout if it is damaged or destroyed.
There are a number of exemptions to the tax, including selling a car, a main home, ISAs or PEPs, betting/lottery/gambling wins, money that forms part of a taxable income, government bonds, anything worth less than £6,000.
Everyone has an annual capital gains tax allowance of £9,200 – that is to say they are not taxed on the first £9,200 they make from disposal of possessions each year. Capital gains are added to a person's income for tax purposes, and taxed at ten per cent (if total taxable income – including capital gains – is less than £2,230); 20 per cent (if total taxable income – including capital gains – is between £2,230 and £34,600); and 40 per cent (if total income – including capital gains – exceeds £34,600).
For more info, see: www.hmrc.gov.uk