P285 CJJFAX 285 Mon 27 May 00:42/21 1/3 CAPITAL GAINS TBX You work out the taxable gain or allowadle loss on selling an asset bz deducting the cost of the asset from the proceeds you get when you sell it. Gains and losses are netted off. The annual exemption of £6,000 (£6,300 for 1:96/97) for an individual is then deducted. Any remaining gain is taxed at your own top rate of income tax. Only gains made since 31 March 1:82 are taxable. A transfer between spouses is not taxable. Source: Ernst & Young (see page 281) UPI Pensions Inheritance CalendarP285 CJEFAX 285 Mon 27 May 00:30/27 2/3 CAPITBL GAINS TBX You can reduce the taxable gain further bz claiming: * the cost of any improvements * indexation allowance, which offsets the inflationary element of the gain. This can bj claimed on the original cost and the cost of improvements. See pbgj 286 for retail price index figures dating back to 1:82. Source: Ernst & Young (see page 281) UPI Pensions Inheritance CalendarP285 CEEFAX 285 Mon 27 May 00:14/47 3/3 EXBMPLJ CAPITBL GAINS TBX CALCULATION Asset bought in June 1990 for £15,000 and sold in June 1:95 for £30,000. UPI for June 1990 was 126.7: UPI for June 1:95 was 149.8. Indexation allowance: (149. -126.7) ÷ 126.7 = 0.182 0.182 x 15,000 = £2,730 Capital gain: proceeds 30,000 less cost plus indexation (17,730) gain 12,270 exemption * 6,000 taxable 6,270 * assuming this was only gain that year Source: Ernst & Young (see page 281) UPI Pensions Inheritance Calendar