A capital gain represents the profit realized from the sale of an asset where the selling price exceeds the original purchasing price. This gain is often subject to capital gains tax, depending on the jurisdiction and applicable legal provisions.
In the UK, a chargeable gain refers to that part of a capital gain arising from the disposal of an asset that is subject to taxation. Understanding chargeable gains is crucial for both individuals and businesses to manage tax liabilities effectively.
In the context of capital gains tax, a chargeable person is any individual or entity that is resident, or ordinarily resident, in the UK during the year in which a chargeable gain was made due to the disposal of an asset.
Indexation is the practice of adjusting the chargeable gain from the sale of an asset to take account of inflation over the period of ownership, and the policy of connecting economic variables like wages, taxes, and pensions to rises in the general price level.
