Capital Gains Tax

As an expat in The Middle East, Capital Gains Tax (CGT) is charged when you sell or gift an asset, such as a property or shares.

Annual exemptions are available, but generally CGT is calculated based on the tax year and your total income. It’s worth remembering that you don’t have to pay Capital Gains Tax on your main home, but if you have more than one residential property you may find yourself more exposed.

CGT ALLOWANCE

There is an annual CGT allowance, which currently stands at £12,300. Any profit made from assets which you sell under this value won’t attract CGT. Anything over this allowance will be subject to CGT. The current rates for CGT vary depending on your Income Tax rate. For example, those who pay higher rate Income Tax will pay 28% CGT on any profits made from residential property and 20% on any other assets.

If you pay basic rate Income Tax, the rate of CGT you pay will depend on the size of the profit but will rarely exceed 18%. Careful planning can help you take advantage of the various tax reliefs available.

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All you need to know about Capital Gains Tax

What is Capital Gains Tax?

Capital Gains Tax is the tax on profit made from selling (or ‘disposing of’) an asset that’s increased in value.

What is the Capital Gains Tax rate?

Depending on your Income Tax band, you will pay a minimum of 10% on your gains, and a minimum of 18% on residential property.

These tax rates can increase up to 20% on your gains, and 28% on residential property.

When does Capital Gains Tax apply?

Capital Gains Tax applies when you sell or dispose of most assets including

  • Personal possessions worth £6,000 or more (excluding vehicles)
  • Residential property that is not your primary residence
  • Your main home if it has been let out or used for business applications
  • Shares you hold that are not part of an ISA or PEP
  • Business assets

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