Why capital gains tax (CGT) matters to a first-time founder
Capital gains tax, often shortened to CGT, can materially reduce what a founder keeps after selling shares, property or other investments. Ownership structure, holding period and available reliefs may change the result. Planning after signing a sale can be too late, but planning must reflect commercial reality and anti-avoidance rules.
Examples of capital gains tax (CGT)
A UK founder sells personally owned shares for £120,000 after allowable costs of £40,000, creating an £80,000 gain before any annual exempt amount or relief. The final tax is not simply £80,000 multiplied by one universal rate. Current UK rules, other income, losses and eligibility for relief all affect it.
Common misunderstanding
CGT is not a worldwide flat tax and not always a separate tax. The UK uses that name, while other countries may include capital gains within income tax or apply different federal and regional rules. A sale by a company may be taxed differently from a founder’s personal sale of company shares.
When to use it
Use the term when estimating the after-tax proceeds of an asset disposal or share sale. Identify the taxpayer, residence, asset, acquisition cost, disposal date and jurisdiction, then obtain current advice before relying on reliefs. Ignore generic online rates that do not match those facts or the tax year involved.