Is there such a thing as a tax-free capital gain? In fact, there is… Every UK resident tax payer is allowed to make tax-free gains of up to £11,300 during the current tax year, 2017-18.
Additionally, you can sell personal possessions and make a gain of up to £6,000 without paying capital gains tax (CGT). This includes a sale of the following items:
- jewellery
- paintings
- antiques
- coins and stamps
- sets of things, e.g. matching vases or chessmen
You’ll need to work out your gain to find out whether you need to pay tax.
Finally, you won’t need to pay CGT on disposals of:
- Gifts to your husband, wife, civil partner or a charity
- Your car, unless you have used it in your business
- Anything with a limited lifespan, e.g. household furniture
- Gains on the sale of ISAs or PEPs
- Sale of UK government gilts and Premium Bonds
- Betting, lottery and pools winnings
And your home can be sold free of any CGT consideration as long as you have not let part the property at any time during your ownership, or you have not elected for a second property to be considered your principal private residence for tax purposes during the same period.
Further considerations to bear in mind:
- When you inherit an asset, Inheritance Tax is usually paid by the estate of the person who’s died. You only have to work out if you need to pay Capital Gains Tax if you later dispose of the asset.
- You may have to pay Capital Gains Tax even if your asset is overseas. There are special rules if you’re a UK resident but not ‘domiciled’ and claim the ‘remittance basis’.
- You have to pay tax on gains you make on residential property in the UK even if you’re non-resident for tax purposes. You don’t pay Capital Gains Tax on other UK assets, e.g. shares in UK companies, unless you return to the UK within 5 years of leaving.
