Capital gain in the construction industry
Capital gain is a term used in the world of finance, particularly in relation to taxation.
When an asset is sold (or disposed of) at a profit (ie the difference between the sale price and the original purchase price), the seller is said to have made a capital gain and may be liable to pay capital gains tax on the profit.
Capital gains can be made on the sale of chargeable assets, including property, jewellery, works of art, vintage wines, and stocks and shares.
Capital gains example:
- An art collector sells a painting for £750,000.
- They originally bought it 10 years previously for £250,000.
- Therefore, they have made a profit (capital gain) of £500,000 and will be liable to pay capital gains tax on that £500,000 (assuming there are no allowances or exemptions in force).
In the UK, capital gains tax must be paid on gains from chargeable assets such as:
- Most personal possessions worth more than the threshold, apart from a car.
- Property that is not a main home.
- A main home if it has been let out, used for business or is very large.
- Shares that are not in an ISA or PEP.
- Business assets.
For more information see: Capital gains tax.
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