Capital gain
Capital gain is the profit you make when you sell, give away or otherwise dispose of an asset for more than it cost you, after deducting allowable costs such as purchase price, improvement costs and selling fees. It commonly arises on assets like shares, investment property or business equipment.
Simple gain calculation
Buy an asset for 1,000, spend 50 on improvements and sell for 1,400 with 30 in selling fees. Your capital gain is 320 (1,400 − 1,000 − 50 − 30).
For tax in the UK, individuals and trusts are generally assessed under Capital Gains Tax, while UK companies usually pay Corporation Tax on their chargeable gains. Reliefs, exemptions and any available losses can reduce the amount that is taxable, so keep clear records of costs and dates.
What matters in practice:
- Gain is usually sale proceeds minus purchase cost and allowable costs; a loss can often be used to offset gains.
- Not all disposals are sales—gifts and exchanges can also trigger a gain.
- Different rules can apply to your main home compared with investment property.
- Companies and individuals are taxed under different regimes, even for similar assets.
