Who needs to declare Capital Gains Tax?
CGT, which is short for Capital Gains Tax, is a tax that is charged on gains arising on “chargeable persons” making a “chargeable disposal” of “chargeable assets”.
First, let’s deal with what a “chargeable person” is.
A “chargeable person” could be either an individual or a company.
This blog is going to cover disposals by individuals, please keep an eye out for a follow-up blog covering disposals by companies.
Individuals who are UK resident for tax purposes in the year in which the disposal takes place are considered a “chargeable person” and are subject to capital gains tax on their gains.
- UK residents are subject to UK CGT on all disposals of chargeable assets, regardless of where in the world the assets are situated.
- Non-UK residents only pay CGT on the disposal of interests in UK land/property.
Now, let’s cover what a “chargeable disposal” is.
The following disposals would be considered “chargeable”:
- Sale or gift of the whole or part of an asset (such as property, land, etc…)
- Exchange of an asset
- Loss or destruction of an asset
- Receipts of a capital sum derived from an asset, such as:
- The compensation received for damage to an asset.
- Receipts for the surrender of rights to an asset.
The following disposals in the eyes of HMRC would be classed as exempt, in other words, non-chargeable disposals.
- Disposals as a result of the death of an individual
- Gifts to charities
Please note that a disposal classed as exempt are outside the scope of CGT and therefore the gains are not taxable, and the losses are not allowable.
Finally, let’s cover what a “chargeable asset” is.
The following table details the more common types of chargeable assets as well as those that are exempt.
|Freehold land and buildings||Motor vehicles|
|Unquoted/Quoted shares||Principal private residence|
|Certain chattels||Investments held within an ISA|
|Goodwill||Qualifying corporate bonds|
|Prizes and betting winnings|
Therefore, to conclude on who needs to declare capital gains tax in the UK, this would be any individual that is a UK resident for tax purposes and who completes a chargeable disposal of one of the above (and more) chargeable assets would need to declare CGT.
If this blog has sparked a few questions in your mind, please feel free to get in contact on 01273 441 187 or via firstname.lastname@example.org and I will be more than happy to help.