Capital gains tax is charged on the net profit made, after a deduction for original cost, on the sale of an asset such as shares and securities.

Individuals are entitled to an allowance of £10,100 per year. Providing that the total capital gains during a tax year are below this then an individual will not pay capital gains tax.

The rate at which capital gains tax is paid is 18%.

From 6th April 2010 the first £2,000,000 of lifetime gains on the disposal of certain assets (broadly unincorporated trading businesses and shares in trading companies where 5% or more is held) will be taxed at 10%.

Companies' capital gains are taxed at the rate at which they pay corporation tax.