From HMRC’s website –
“Capital Gains Tax (CGT) is a tax on the profit when you sell (or ‘dispose of’) something (an ‘asset’) that’s increased in value.
It’s the gain you make that’s taxed, not the amount of money you receive. For example, if you bought a painting for £5,000 and sold it later for £25,000, you’ve made a gain of £20,000 (£25,000 minus £5,000).”
Now, this has generally not been an issue as each of us has the benefit of a £12,300 capital gains allowance each tax year. If you don’t use your allowance, or only use part of it, “lose it” and each 6th April the allowance is reset.
Why should you care now? Because the allowance is being cut to £6,000 this 6th April 2023 and £3,000 the year after. THEREFORE if you were considering completing a sale or gift of property that would be liable to HMRC for CGT it is imperative you enter contract before the end of this current tax year.
Some housekeeping – disposals of your main residence or transfers to your spouse or charity are exempt. Everything else you dispose of (i.e. sell, gift), where it’s worth more than you paid for it (less certain allowances), will be deemed eligible for capital gains tax.