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Capital Gains Tax (CGT)

Colourful dice
You don't pay CGT on gambling wins
If you’re in the happy position of having investments that grow in value throughout the year, you could find yourself having to cough up extra tax. This is what is known as Capital Gains Tax.
Capital Gains Tax (read more on the HMRC website) is a pretty nasty one, so you want to avoid it if at all possible.
 
  • The government lets you keep some of your profit before taxing you on the rest. The amount you are allowed tax-free changes usually each year but for the 2008-09 year, its £9,600 and £19,200 for married couples.
 
  • The specific rules and regulations are complicated and if you end up with an extensive share and/or property portfolio, then you definitely need an accountant to sort out your tax liabilities.
 
The Capital Gains Tax basics
 
The Government says you might have to pay CGT if you:
  • Sell, give away, exchange or otherwise dispose of as asset or part of an asset. This could be a second home or investment property, some shares, an expensive painting or a business
  • Receive money from an asset – such as compensation for damaged property (pretty unfair that one we think).
 
You don’t have to pay CGT on:
 
  • Your car
  • Your main home
  • ISAs or PEPs
  • UK Government gilts(bonds)
  • Personal belongings worth £6,000 or less when you sell them
  • Betting, lottery or pools winnings
  • Money that you pay income tax on.


Jasmine and the Moneymagpie team
Moneymagpie Moneypedia
07.04.2008

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