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Capital Gains Tax is a tax applied to the profit made from selling certain assets, such as property, that have increased in value over time.

It is a tax specifically on the capital gain, which is the difference between the initial investment or savings you put into something, and the value of that over a period of time.

Capital Gains Tax Example:

Suppose you've been saving money in a stock market investment account. Over time, your investments have grown, and you decide to cash out some of your holdings, resulting in a profit of £10,000. This £10,000 profit is considered a capital gain.

When you sell your investments and realise a capital gain, you may be subject to capital gains tax, depending on your country's tax laws. The tax rate and how much you owe will depend on various factors, including how long you held the investments and your overall income.

Chip does not provide tax advice. Tax treatment depends on individual circumstances and may be subject to change in the future.