Jurisdiction(s):
United Kingdom

Key definition

Capital gain definition

What does Capital gain mean? Capital gain describes the profit realised when an asset is disposed of for more than its acquisition or base cost, after deducting allowable costs (for example, incidental acquisition and disposal expenses and qualifying enhancement expenditure). It arises on a disposal, not merely from an increase in value; an unrealised capital gain is a paper gain that would crystallise only if a disposal occurs. The opposite outcome is a capital loss. In practice, disposals include sales, gifts, part disposals and certain reorganisations. The concept is used across transactional, private client and corporate tax work because the timing, valuation and structure...

UK capital gains tax: assets, disposals (including deemed), chargeable persons, calculation, options, trustees, exemptions, reliefs and losses

Published by a LexisNexis Tax expert

Practice notes

When an individual disposes of an Asset and realises a profit of a capital nature, a taxable Capital gain may arise. In determining whether a charge to tax is triggered, consider:

whether the asset, the act of disposal, and the disposer are of kinds within CGT’s scope
whether the ‘consideration minus Costs’ computation in Practice Note: How is a capital gain calculated? produces a positive figure
whether any exemption or relief is available
whether losses exist to set off aGainst the gain

These points are outlined below. For what distinguishes capital from revenue profits, see Practice Note: Taxation of trading profits—basis, receipts and deductions—Receipts—Capital v revenue.

Note that particular corporate tax regimes override the chargeable gains rules in some cases, notably the intangible fixed asset rules and the loan relationships rules. For more detail, see: Intangible fixed assets and tax—overview and Loan relationships—overview.

In this Practice Note, CGT refers to both capital gains tax and corporation tax on chargeable gains.

Assets

As a starting point, all forms of property are treated as assets for...

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Web page updated on 22/05/2026

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