The tax paid on the profit of selling or disposing an asset, which increases the value or capital, is referred to as capital gain tax. It is the gain made that’s taxed, and not the amount of money received. For example, Ben purchases an asset worth £5,000 and sold it later for £20,000. Thus, the gain made is difference between the selling price and purchase price i.e. £15,000. However, some assets are tax-free and an individual doesn’t have to pay capital gains tax. This applies if all the gains within a year are under the tax-free allowance limit. Disposing an asset includes – selling it, giving the asset as a gift, or transferring the asset to someone else or receiving reimbursement for it.