Essentially, Equity is the total value of something when broken down into assets. You may have heard this term referred to when discussing a will or business. Assets are items of value, such as a house, a car or jewellery. In this context, equity can refer to the value of all the shares in a limited company.
If a company’s assets are liquidated, the equity would be the value that the shareholders are returned. When you buy shares, you are actually buying equity in the company.
If you make an income through equity, you may be liable to pay tax on the earnings.
When it comes to equity release through liquidation, you won’t owe tax on money your receive back.
For more information about your tax obligations on equity, visit the HMRC website.