Taxation in the United Kingdom/Capital gains tax
Capital gains in the United Kingdom are subject to tax at the marginal rate of income tax (for individuals) or of corporation tax (for companies).
Capital gains for individuals are taxed slightly differently from those for companies:
Individuals edit
The basic calculation for individuals (in very broad terms) is proceeds less cost; Individuals also have a capital gains tax free amount or "annual exemption" (in 2006-07 this is £8,800[1]).
Companies edit
For companies, the chargeable gain is calculated (again, in very broad terms) as proceeds less cost; however, instead of taper relief, companies are entitled to indexation allowance, which is calculated with reference to movements in the retail prices index (individuals are also entitled to indexation allowance prior to April 1998). Companies are not entitled to any annual exemption.