UK Capital Gains Tax

Capital Gains Tax (CGT)

Capital Gains Tax (CGT) is a tax on gains, or profit, made on the disposal of assets, whether the disposal occurs due to the sale of the asset or gifting. The most common capital gains are realized from the sale of stocks, bonds, precious metals, and property. It is distinct from tax on regular income.

Disposing of an asset includes

CGT is common throughout the world, and is particularly high in the USA, Canada, Australia, the UK, Ireland, Germany, France, Portugal, Spain and Italy, with Denmark having the highest top marginal rate at 42%. Some countries distinguish between short-term and long-term holdings, and property. Most have different rates of taxation for individuals and corporations. Some countries do not impose any CGT, including here in the UAE.

The UK tax system, like others, operates on a worldwide basis. This means that if you are a returning British expatriate, your income and capital gains will generally be taxable in the UK, regardless of the country in which they arise.

In the UK, you pay CGT on the gain when you dispose of chargeable assets such as:

If you make a profit on the sale of certain types of property, the gain after deductions will be taxable at the main rate of either 10% or 20%, depending on your income tax bracket. The rates for residential property not eligible for Private Residence Relief are 18% and 28%.

Even though you may be deemed non-resident for income tax purposes, you are treated as temporarily non-resident for CGT purposes for up to 5 years. Certain gains made during that time are taxed in the year you return to the UK if within five years.

It is worth noting the following when preparing a CGT calculation:

We always recommend that you seek professional advice before finalizing any declaration or capital gains tax calculation.

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