Capital Gains tax on shares and investments
When you sell shares you will either make a profit or a loss. Profits made are classed as a capital gain.
There are some exemptions where capital gains tax (CGT) is not liable:
- Individual savings accounts (Isa’s)
- Venture Capital Trusts
- Enterprise Investment schemes
- Gifts to Charity
- Government Securities
- Corporate Bonds of a qualifying status
- Transfers of shares between spouses or partners in a civil partnership
Apart from the exemptions, sales or disposal of the shares will normally be classed as a potential capital gain.
Each person has an allowance each year they can use to reduce the amount of CGT they might pay. If your total gains for the tax year are below the “annual exempt allowance” you will not have to pay any tax.
If your gains are over the allowance then tax would be due on the balance. It might also be possible to offset any losses from previous tax years. If you do not use your annual exempt allowance for CGT in a tax year, then you lose it and you cannot carry it forward to another year. The CGT tax rate payable will depend on your total income and any gains made for the tax year in question.
