CAPITAL GAINS TAX

THE BASICS

Most people’s biggest assets are their home, their pension and then other investments held inside individual savings accounts. Any increase in the value of these is free of capital gains tax.

Assets that are not your main home, and investments held outside Isas or pensions, on the other hand, are likely to attract CGT if they are sold at a profit. Everyone has an individual annual CGT allowance, currently £11,100.

That allowance, if used judiciously (to sell investments in tranches, for example, across several tax years), is a useful planning tool.

That spouses can give each other assets without triggering a taxable gain is also helpful, because it means couples’ individual allowances can be used effectively.

Above that allowance gains are taxed according to your income tax rate: basic-rate payers pay CGT at 18 per cent; higher- and additional-rate taxpayers pay 28 per cent.