It is the tax charged when you sell or dispose of an asset that has made a profit. There are certain assets that are tax free – e.g. your car or your main home. You only have to pay tax if the ‘gain’ is above your annual allowance, which from April 2017 is £11,300. You may also be able to reduce a gain by offsetting a capital loss you have incurred.
The tax rates charged depend on whether you are a basic or higher rate tax payer and whether the gains are from residential property or other chargeable assets.