Capital Gains Tax (CGT) applies if you make a profit on a capital asset. Broadly, a capital asset is something of a permanent nature or long term investment such as shares in a company. If you make money in this way then you may need to disclose it to the Inland Revenue as it may have a tax implication if the "profit" is over your capital tax free allowance. The allowance is available each tax year and is set at £9,600 for 2008/2009.
If you are unfortunate enough to make a capital loss, for example you sell shares for less than the purchase price, then you may use the loss against any other capital gains in the same tax year or future years. In order to do this, you must notify the Inland Revenue of the loss , so that it is on record and available to use when you need it.
There are rules and procedures on how the capital gains and losses work. These should be considered carefully beforehand.
If you believe the capital gains tax provisions apply to you and you need further help, then please contact us on the Help, I’m a student form.