Capital Gains Tax Exemptions

Capital Gains Tax (CGT) is payable when a chargeable capital asset is disposed of at a profit.

Simply, a capital gain is calculated by deducting the cost of the asset from the proceeds received on the sale. Associated fees of the purchase and disposal can also be deducted e.g., solicitor fees when selling a property. 

There are certain assets that are exempt from CGT, and these include ISAs, gilts and wasting chattels (tangible movable objects with expected life of 50 years or less). Chattels that are purchased and sold for £6,000 or less are also exempt from CGT. 

Where a gain is made on a chargeable asset, the first £12,300 of the gain will be covered by the annual exemption which is available to most individuals. 

Transfers of assets between spouses are made at a nil gain/nil loss and is not a chargeable disposal for CGT purposes. Therefore, where one spouse is disposing of an asset and the other spouse has not utilised their annual exemption, it may be beneficial to make a transfer to the other spouse in order to utilise both annual exemptions.  

Disposals of your main home will also be exempt from CGT provided you have lived in the property for the whole time you owned it. If there was a period of unoccupancy (e.g., you moved out and began to rent the property), part of the gain will be covered by Principal Private Residence relief but the gain in the period of unoccupancy will be chargeable to CGT on the amount exceeding the annual exemption. Capital gains made on second home where you have not lived in the property will be chargeable to capital gains tax in full. 

If you have sold or are considering selling a capital asset, please do not hesitate to contact Keely Hughes with any queries of the available exemptions.