Individuals are subject to Capital Gains Tax (CGT), while companies are required to pay corporation tax on their capital gains. Individuals are entitled to annual tax-free allowances known as the 'annual exempt amount', whereas companies are not eligible for this benefit.

To calculate the appropriate tax rate for individuals, net gains are added to their total taxable income. The standard rate is applicable only if the net gains, when added to total taxable income, do not exceed the basic rate band. In the case of qualifying gains that fall under Investors' Relief¹, a 10% charge applies to the first £10 million. Gains qualifying for Business Asset Disposal Relief² are also subject to a 10% charge but only for the first £1 million.

Rates and annual exemptions

For individuals who fall under the higher rate or additional rate tax bracket, the higher rate applies. Certain residential property disposals and carried interest can incur a standard tax rate of 18% or a higher rate of 28% for individuals.

¹In order to be eligible for the 10% Capital Gains Tax (CGT) rate through 'Investors' Relief' , individuals must satisfy the following requirements:

1) newly issued shares must be subscribed for by the individual for new consideration
2) the shares must be in an unlisted trading company or an unlisted holding company of a trading group
3) the company must have issued the shares on or after March 17, 2016, and they must have been held for at least three years from April 6, 2016
4) the shares must have been continuously held for three years prior to disposal.
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₂In the event that individuals sell or dispose of their business, they might be eligible to apply for Business Asset Disposal Relief (formerly known as Entrepreneurs' Relief before April 6, 2020). This relief allows them to pay a reduced capital gains tax rate of 10% on the profits.

Your company or association must file a Company Tax Return if you get a ‘notice to deliver a Company Tax Return’ from HM Revenue and Customs (HMRC). You must still send a return if you make a loss or have no Corporation Tax to pay.

You do not send a Company Tax Return if you’re self-employed as a sole trader or in a partnership - but you must send a Self Assessment return.

ISA investments provide a tax-efficient way of investing, as the income earned from these investments is not subject to income tax. Furthermore, any profits generated from investments held within an ISA are not subject to capital gains tax. Investors can choose to subscribe to a cash ISA, a stocks and shares ISA, or an innovative finance ISA, as long as they do not exceed the overall annual investment limit. Transfers between different types of ISAs are also permitted.

The Lifetime ISA is available for individuals aged between 18 and 40, and allows them to save up to £4,000 per year until they turn 50. The government provides a 25% bonus on these contributions (up to £1,000 per year), which can be used towards the purchase of a first home or accessed tax-free at age 60, subject to certain conditions. Early withdrawals from a Lifetime ISA are subject to penalties, unless they are made under specific circumstances.

IHT may be payable when an individual's estate is worth more than the IHT nil rate band when they die. Lifetime and death transfers between UK domiciled spouses are exempt from IHT.A further nil rate band of £175,000 may be available in relation to current or former residences. The IHT threshold available on death may be increased for surviving spouses as there may have been a nil rate band not used, or not fully used, on the first death. There are reliefs for some business and farming assets which reduce their value for IHT purposes. IHT may also be payable on gifts made in an individual's lifetime but within seven years of death. Some lifetime gifts are exempt. Transfers of assets into trust made in an individual's lifetime may be subject to an immediate charge but at lifetime rates. There are also charges on some trusts.

Mileage Allowance Payments refer to the highest amount an employee can receive tax-free from their employer for using their personal vehicle for business-related trips. Employers can make such payments up to a specific limit each year without the need to report them to HMRC. If an employee receives a payment below the set limit, they can claim tax relief on the shortfall.

Class 1 NIC contributions are paid by employees from age 16, provided they earn enough. Employers also pay Class 1 NIC contributions based on a table of rates. However, for employees under 21 years of age and apprentices under 25 years of age, the employer NIC rate is reduced to 0% up to the Upper Secondary Threshold of £967 per week. This also applies to veterans in their first 12 months of employment. Once employees reach their State Pension age, they stop paying Class 1 NIC contributions, while the employer's contributions continue.

The amount of tax relief available for personal pension contributions is based on the higher of £3,600 gross or 100% of relevant earnings. If contributions, whether made by an individual or employer, exceed £40,000, they may be subject to income tax for the individual. However, once money purchase pensions are accessed, the limit may be reduced to £4,000. Unused amounts up to the £40,000 limit may be carried forward for three years. For individuals with adjusted income over £240,000, the annual allowance is tapered. For every £2 of income over £240,000, the allowance is reduced by £1, with a minimum allowance of £4,000. Employer contributions qualify for tax relief if they are paid wholly and exclusively for business purposes. Large contributions may be eligible for tax relief spread over several years.

The amount of tax relief available for personal pension contributions is based on the higher of £3,600 gross or 100% of relevant earnings. If contributions, whether made by an individual or employer, exceed £40,000, they may be subject to income tax for the individual. However, once money purchase pensions are accessed, the limit may be reduced to £4,000. Unused amounts up to the £40,000 limit may be carried forward for three years. For individuals with adjusted income over £240,000, the annual allowance is tapered. For every £2 of income over £240,000, the allowance is reduced by £1, with a minimum allowance of £4,000. Employer contributions qualify for tax relief if they are paid wholly and exclusively for business purposes. Large contributions may be eligible for tax relief spread over several years.

Registered businesses add value-added tax (VAT) to their sales, known as output VAT, while VAT is charged on most goods and services they purchase, known as input VAT.

There are three VAT rates:

- the standard rate applies to most goods and services,
- the reduced rate applies to some goods and services, such as home energy, and
- the zero rate applies to most food and children's clothing.

However, some supplies, such as postage stamps, financial, and insurance transactions, are exempt from VAT. A business must register for VAT if the value of taxable supplies exceeds the annual registration limit.