P275 CEEFAX 2 275 Thu 25 Dec 22:40/54 1/3 CAPITAL GAINS TAX You work out the taxable gain or allowable loss on selling an asset by 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 £6,300 (£6,500 in 1997/98) 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 271) PURCHASED LIFE RATES MOVED TO 265 Pension TaxIndjx Inc Tax Main MenuP275 CEEFAX 2 275 Thu 25 Dec 22:28/41 2/3 CAPITAL GAINS TAX You can reduce the taxable gain further by 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 276 for retail price index figures dating back to 1982. Source: Ernst & Young (see page 271) PURCHASED LIFE RATES MOVED TO 265 Travel 430 Front page 100 Pension TaxIndjx Inc Tax Main MenuP275 CEEFAX 2 275 Thu 25 Dec 22:48/31 3/3 EXAMPLE CAPITAL GAINS TAX CALCULATION Asset bought in June 1990 for £15,000 and sold in June 1996 for £30,000. UPI for June 1990 was 126.7: UPI for June 1996 was 153.0. Indexation allowance: (153.0-126.7)/126.7 = 0.208 0.208 x 15,000 = £3,120 Capital gain: proceeds 30,000 less cost plus indexation (18,120). gain 11,880 exemption* (6,300) taxable 5,580 * assuming only gain that year Travel 430 Front page 100 Pension TaxIndjx Inc Tax Main Menu