Until they start taxing sex, in the UK capital gains tax (CGT) is the most annoying tax to find yourself paying.
CGT is a tax on any profits you make when you sell or transfer assets like shares in your portfolio, rental properties, or even your own company.
In the UK capital gains tax is much simpler than it used to be. UK capital gains tax is now a flat 18% tax rate, and fiddly nonsense like taper relief has been abolished. It no longer matters whether you’ve owned your shares for a day or a decade when calculating your taxable gains.
Even with the new flat rate, like a fly in your soup CGT can really spoil the fun of making money.
Unlike inheritance tax, which is a tax on your good fortune, or income tax, which is a cost of having a job, UK capital gains tax is a tax on success!
Of course, sometimes you won’t make a profit when you sell. That’s called a capital gains loss, and unfortunately you don’t get money back from the government for losing money (not unless you make cars or you’re a bank…)
However, you can offset capital gains with capital losses to reduce the total gain you will pay tax on.
