What counts as a CGT event

Capital gains tax is not triggered by profit. It is triggered by an event. Until one happens, a holding can double and you owe nothing; when one happens, the gain is crystallised whether or not any cash reached you.

The events a normal investor meets

• Selling an asset — the common case.
• Giving it away. A gift is a disposal, and the gain is worked out on market value rather than the nothing you received.
• Swapping one asset for another, which is two things at once: a disposal of what you gave up and an acquisition of what you got.
• The asset being lost or destroyed, where the event lands when you first receive insurance or compensation.

The date is not always the date you were paid

Where there is a contract of sale, the CGT event happens on the date of the contract, not on settlement. Property usually works this way. A sale contracted in June and settled in August falls in the earlier financial year, which changes which return it belongs in and can change whether a twelve-month holding period was met.

Where there is no contract, the event happens at the time of the sale itself, which for shares is the trade date rather than the day the money clears.

Why this is the first thing to get right

Every other calculation hangs off the event date. It decides which financial year the gain falls in, whether the holding period was met, and which set of rules applied at the time. Getting the date wrong moves a gain into the wrong year, and the correction is an amended return.