It is mandatory to pay capital gains tax if you dispose for instance, you may receive compensation for a damaged good from an insurance company. Essentially, you don’t ought to pay any capital gains tax on the sale of your car, and first home, under most conditions, ISAs or PEPs, UK government gilts, income from betting, lotteries or pool winnings, or in other words, any money that is already subject to income tax.
Calculating the CGT. When you sell an asset. Let us assume you bought should need to pay CGT on the gain which in this case is 1000.
When you give an asset.
It is important to point out that you should pay CGT on the value of the asset and not what you get from it. We need to consider that you bought a flat for your son at 70000 four years ago and its value has now appreciated to 100,Suppose you let him have it at less than the market value, 75,Your gain will be 100000 minus 70000 which is 30000, to illustrate this. When you dispose of an asset. Your gain gonna be on the basis of the market value when you received it, So if you dispose of an asset which you received as a gift.
You are gifted a garage whose value at the time when the gift was made was Now you sell it for Your gain in this case gonna be 3000.
James Acheson lives in Canada but writes about a lot of UK financial topics including Capital Gains Tax, life insurance, debt management, and debt consolidation. He also sometimes writes for the life insurance site