Capital Gains Tax comes into play when you make a profit from selling something you own. The important point to remember is that the tax is calculated on the profit you make, and not the amount you sold it for. As the name suggests, it’s all about the gain!
So, Capital Gains Tax is essentially a tax on any profit you made on the disposal of an asset and it applies to most assets when they’re sold. There are some exceptions, however – for example, your car, your main place of residence if you own your home, and personal possessions sold for £6,000 or under are all exempt.
You don’t pay Capital Gains Tax when you sell your car unless you use it for business. There are also some complex rules for assets with an expected life...