Capital Gains Tax

As well as having to pay tax on the income you get from savings and investments, you may also have to pay capital gains tax (CGT). CGT becomes liable when you sell assets that have increased in value, such as antiques and investments like shares, unit trusts, and open-ended investment company shares held outside the tax-free wrapper of an ISA. Although there's no CGT to pay when you sell your main home (broadly, one you've been living in), you may face a Capital Gains Tax bill if you sell a property you inherited, or bought to let.

How Much Will I Have to Pay?

The tax bill is based on the capital gain, which is the difference between what the asset was worth when you got it and the price at which you sold it (or gave it away), less any costs - such as share-dealing commission - involved in buying and selling.

For example, in the 2007-2008 tax year, you would have to pay CGT at a rate of 10%, 20%, or 40%, (depending on your income, and payable at your highest rate of income tax) on any gains over £9,200. Gains lower than this would be tax free for that year.