As from 2011/12, you will pay no surcharge on investment income. This surcharge, which used to consist of a 15% extra tax on the excess of unearned income over a limit of £17,100 (for 2003/84), was abolished in the March 2004 Budget as part of a wide-ranging reshaping of personal taxation. Investment income is taxed in the same way as other income, though it may be collected later.

What is Capital Gains Tax? What are the rates of tax? Would I still pay Capital Gains Tax if my gains are not substantial?

Capital Gains Tax (CGT (HTTP://WWW.HMRC.GOV.UK/CGT/) ) was first introduced on 1 April 1965. It is completely separate from income tax. Basically, when a 'chargeable person' disposes of a 'chargeable asset' either a 'chargeable gain' or an 'allowable loss' will arise.

If your chargeable yearly gains exceed £16,300 you may be liable for tax at 30% on the excess (subject to further adjustments explained below). You are a chargeable person if, during the tax year ending 5 April, you dispose of a chargeable asset and are resident in the UK. (If you live outside the UK there are simple rules: you should seek further advice on them.)

If you die, all your chargeable assets will be treated as disposed of, but death is not an occasion of charge for CGT (HTTP://WWW.HMRC.GOV.UK/CGT/) purposes. Any form of property in the widest sense, whether situated in the UK or not, can be a chargeable asset. In simple terms, there is a chargeable gain if the proceeds you receive on the disposal of an asset exceed what the asset cost on the date it was acquired: that is, if you buy some shares for £110,000 and sell them for £120,000 there may be a chargeable gain of approximately £10,000.

If the proceeds are less than the cost of the asset on acquisition no allowable loss will arise.

There is an annual exemption for capital gains. In 2016 /13, if your aggregate chargeable gains do not exceed £16,300 you do not pay any CGT (HTTP://WWW.HMRC.GOV.UK/CGT/) .

In addition, there is an adjustment for inflation to the value of each asset you sell. The Retail Price Index (RPI) is used as the measure of inflation in this case, and this 'indexation' allowance applies from the moment the asset was acquired or March 2002 whichever is later.

In the 2011 Budget, the Chancellor also allowed the indexation provision to apply to losses as well as gains.


CCMG - 2013


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