Capital gains tax definition

Capital gains tax (or CGT), is the tax levied by the government on the profits made from financial asset sales. CGT regulations and levels vary from country to country.

When you buy most financial assets like shares or commodities, you are doing so in the hope that you will later be able to sell them on at a profit. When that profit is incurred it is usually subject to capital gains tax.

Some financial products and markets do not incur capital gains tax. In the UK, for example, derivative trading products such as binaries are exempt from CGT.* CGT regulations change over time though, so that might not always be the case.

* Tax laws are subject to change and depend on individual circumstances. Tax law may differ in a jurisdiction other than the UK.

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CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage.