This is one of a number of explanatory articles, part of a set copied under licence from H M Revenue & Customs website:
Introduction
Assets and disposals
Working out the chargeable gain
Reliefs (other than taper relief)
Allowable losses
Taper relief: qualifying holding period
Taper relief: business assets and non-business assets
Working out the tapered chargeable gains
Working out the amount chargeable to CGT
Working out the tax due
Post transaction valuation checks for CGT
Indexation allowance
Taper relief on disposals of business assets on or before 5 April 2000
Introduction
This series of articles tell you the basic rules of Capital Gains Tax (CGT) for individuals.
You will find this article useful as a complete guide on all reliefs other than taper relief.
You may qualify for reliefs which reduce or defer your chargeable gains. Some reliefs that defer chargeable gains work by reducing the acquisition cost of a replacement asset, so that the chargeable gain you make when you subsequently dispose of that asset will be increased.
Some reliefs are given automatically: you do not have to claim them. Others are given only if you claim them.
It covers only common situations and does not contain all the guidance you will need to work out your chargeable gain or allowable loss in every case, or how much CGT you will have to pay.
Taper relief, which is given after all other reliefs and allowable losses, is explained separately in article 6 – Taper Relief and article 7 – Taper Relief and Businesses.
What if I sell my home?
No chargeable gain arises when you dispose of your home if all the following conditions are met.
- You bought it, and made any expenditure on it, primarily for use as your home rather than with a view to making a profit.
- Throughout the period that you owned it, it was your only home.
- You did actually use it as your home all the time that you owned it.
- Throughout the period that you owned it, you did not use it for any purpose other than as a home for yourself, your family and no more than one lodger.
- The house and garden do not exceed half a hectare (about one and a quarter acres).
Even if not all these conditions are met, you may still be entitled to relief. For example:
- if you had more than one home, you may be able to nominate one of them as your main home for the purposes of the relief
- if all the conditions were met throughout all but the last three years of the period that you owned your home, you will still be entitled to the full relief
- if you lived away from home temporarily (for example, while working abroad), you may still be entitled to the full relief
- if all the conditions were met for part of the period that you owned your home, you will still be entitled to some relief
- if you used part of the building as your home and part for some other purpose (for example, for business purposes or for letting) you will still be entitled to some relief.
You may also qualify for the relief if
- you sell part of the garden or outbuildings belonging to your home without selling the home itself, or
- your home is a fixed caravan or houseboat.
Married couples may have relief from CGT on only one home. However
- you and your husband or wife may each have had a qualifying home before you were married. After marriage you both live together in one of these homes and sell the other. Provided that it is sold within three years of marriage, you may not have to pay any CGT (subject to the normal rules for this relief). If you sell it after more than three years of marriage it may qualify for partial relief
There are special rules on divorce and separation.
What other reliefs are available?
Business asset roll-over relief allows you to defer the gain on the disposal of a business asset when you acquire another business asset.
Business transfer relief (incorporation relief) defers a gain where you transfer your business to a company in return for shares.
Relief on disposals of shares to an approved Share Incentive Plan
You can defer gains on disposals after 27 July 2000 of shares that are not listed on a recognised stock exchange provided certain conditions are met.
Gifts holdover relief allows you to defer the gain on the disposal of certain assets that you give away or sell for less than their market value.
Retirement relief applied to gains arising before 6 April 2003. It reduces a chargeable gain when you dispose of your business or shares in your trading company and you are
- aged 50 or over, or
- retire before that age owing to ill-health.
Enterprise Investment Scheme (EIS) deferral relief allows you to defer the gain on the disposal of an asset when you subscribe for shares in an EIS company.
Venture Capital Trust (VCT) deferral relief allows you to defer the gain on the disposal of an asset when you subscribe for shares in a VCT.
Halving relief reduces by half certain gains deferred from before April 1988.
Unremittable gains relief allows you to defer a gain on the disposal of an overseas asset where you are unable to transfer the gain to the United Kingdom because of exchange controls or a shortage of foreign currency in the country in which the asset was situated.
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