The Taxation of Chargeable Gains Act 1992
c 12 is an
Act of Parliament
Acts of Parliament, sometimes referred to as primary legislation, are texts of law passed by the legislative body of a jurisdiction (often a parliament or council). In most countries with a parliamentary system of government, acts of parliame ...
which governs the levying of
capital gains tax
A capital gains tax (CGT) is the tax on profits realized on the sale of a non-inventory asset. The most common capital gains are realized from the sale of stocks, bonds, precious metals, real estate, and property.
Not all countries impose a c ...
in the United Kingdom. This is a tax on the increase in the value of an asset between the date of purchase and the date of sale of that asset. The tax operates under two different regimes for a
natural person
In jurisprudence, a natural person (also physical person in some Commonwealth countries, or natural entity) is a person (in legal meaning, i.e., one who has its own legal personality) that is an individual human being, distinguished from the b ...
and a
body corporate
In law, a legal person is any person or 'thing' (less ambiguously, any legal entity) that can do the things a human person is usually able to do in law – such as enter into contracts, sue and be sued, own property, and so on. The reason for ...
.
For a natural person, the rates of the capital gains tax are the same as those for earned income. The tax is levied at a rate determined by the highest rate of
income tax
An income tax is a tax imposed on individuals or entities (taxpayers) in respect of the income or profits earned by them (commonly called taxable income). Income tax generally is computed as the product of a tax rate times the taxable income. Ta ...
which that person pays. Each year a natural person has an amount of gain, fixed by law, which is exempt from tax.
By contrast, for bodies corporate, the chargeable gain is treated as additional profits for the accounting period in question. The capital gains tax is charged as additional
corporation tax
A corporate tax, also called corporation tax or company tax, is a direct tax imposed on the income or capital of corporations or analogous legal entities. Many countries impose such taxes at the national level, and a similar tax may be imposed a ...
. Bodies corporate have no allowance for gains free from tax.
Various reliefs from capital gains tax exist. These include indexation relief, where the amount of gain subject to tax is reduced by factoring in general price inflation, and taper relief, where set percentages of the gain are exempt from tax if the asset has been held for a certain length of time.
The Act has been amended yearly by subsequent
Finance Acts
A Finance Act is the headline fiscal (budgetary) legislation enacted by the UK Parliament, containing multiple provisions as to taxes, duties, exemptions and reliefs at least once per year, and in particular setting out the principal tax rates f ...
.
See also
*
Income Tax Act 2007
The Income Tax Act 2007c 3 is an Act of the Parliament of the United Kingdom. It is the primary Act of Parliament concerning income tax paid by individual earners subject to the law of United Kingdom, and mostly replaced the Income and Corporati ...
, regarding taxation of income, such as from work or
dividend
A dividend is a distribution of profits by a corporation to its shareholders. When a corporation earns a profit or surplus, it is able to pay a portion of the profit as a dividend to shareholders. Any amount not distributed is taken to be re-i ...
s
*
Corporation Tax Act 2010
The Corporation Tax Act 2010 (c.4) is an Act of the Parliament of the United Kingdom that received Royal Assent on 3 March 2010.
It was first presented ( first reading) in the House of Commons on 19 November 2009 and received its third readin ...
c 4, regarding taxation of corporations' income
*
Value Added Tax Act 1994
References
External links
*
United Kingdom Acts of Parliament 1992
Tax legislation in the United Kingdom
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