Capital gains tax
Capital Gains Tax is not a tax which is implemented worldwide although it does apply in the UK. It is a tax which is applied on items which have been purchased at a lower amount and then sold at a profit. Companies do not pay capital gains tax. Any capital gains made by a company are classed as profits and therefore subject to corporation tax instead.
In the tax year 2007/2008 the capital gains tax rate was 10%. This was raised to 18% for 2008/2009.
There is a Capital Gains Tax free allowance for individuals of £9,600.00 in 2008/2009 (ie any gains up to £9,600.00 are exempt from this tax). Any gain above this amount is taxed at 18%.
Entrepreneur Tax Relief
If however, you are an entrepreneur and are selling your business you are able to apply for a entrepreneur's relief which means that you can reduce Capital Gains Tax on the first £1,000,000.00 to 10% instead of the normal rate of £18%, this is a one off allowance and does not, unlike an individual allowance renew after a year has elapsed.