P285 CEEFAX 285 Mon 4 Nov 22:00/11 1/3 CAPITAL GAINS TAX You work out the taxable gain or allowable 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 1996/97) 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 1982 are taxable. A transfer between spouses is not taxable. Source: Ernst & Young (see page 281) UPI Pensions Inheritance CalendarP285 CEEFAX 285 Mon 4 Nov 21:35/47 2/3 CAPITAL GAINS TAX You can reduce the taxable gain furthjt 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 page 286 for retail price index figures dating back to 1982. Source: Ernst & Young (see page 281) UPI Pensions Inheritance CalendarP285 CEEFAX 285 Mon 4 Nov 21:43/27 3/3 EXAMPLE CAPITAL GAINS TAX CALCULATION Asset bought in June 1990 for £15,000 and sold in June 1995 for £30,000. UPI for June 1990 was 126.7: UPI for June 1995 was 149.8. Indexation allowance: (149.8-126.7) ÷ 126.7 = 0.182 p.182 x 15,000 = £2L730 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