Capital gains tax is tax on the profit or gain you make when selling or disposing of an asset.
This is the profit you make when it is no longer yours for example:
- Selling it
- Giving assets away as a gift
- Transferring to another person
- Exchanging it for something else
- Compensation received insurance payouts when an asset has being destroyed.
It is not the full amount of money it is the amount of profit you make which is subject to capital gains tax.
Not all assets however are liable to capital gains tax when you sell or dispose of them. Some of the assets, which are exempt from this, are cars, personal possessions of less than £6,000 and usually your main home. However when it comes to inheritance or second properties they are subject to capital gains tax.