When you dispose of assets, such as shares, business interests, property and other investments you may have to pay capital gains tax, or CGT. The tax law is complicated and there are a number of reliefs available that may reduce or remove your liability all together.
We can help you assess whether you have to pay capital gains tax, advise whether any relief is available and calculate how much you need to pay.
Our experts can also help:
- Transfer assets between spouses;
- Sell your company;
- Close down your company;
- Assess any tax due on selling a second home or furnished holiday let;
- Mitigate tax capital gains tax liabilities in the unfortunate event of a divorce;
- Advise and assist with making entrepreneurs relief claims when selling significant business assets;
Advise on EIS (Enterprise investment schemes) or SEIS (Seed enterprise investment schemes) when needed.
If you need any help please contact us
What is Capital Gains Tax (CGT?)
Capital gains tax is due on the sale, transfer, gifting or other disposal of an asset such as investments, property or other high value items that increase in value. The area is wide ranging and can be very complicated.
What is the capital gains tax rate?
For the 2018/19 tax year the rate of capital gains tax is 18% (for basic rate income tax payers) or 28% (for higher rate income tax payers) for disposals of residential properties that are not otherwise exempt, and 10% and 20% respectively for all other gains.
What is the Capital Gains Tax Annual Exemption?
For the 2019/20 tax year the annual exemption is £12,000 for individuals, and £6,000 for trusts. This is the total amount of capital gain you can make before you start paying capital gains tax.
Who pays capital gains tax?
Capital Gains tax is payable by individuals and trusts on the gains made when selling appreciating assets. Trusts will suffer the same capital gains tax rates as a higher rater income tax payer.
How can I avoid Capital Gains tax?
All individuals receive an annual exemption from capital gains tax, which often means that the average tax payer will not suffer capital gains tax. Even if your disposal is covered by your annual exemption you will still be required to declare the disposal on your self assessment tax return.
There are a lot of reliefs available for capital gains tax, often when the proceeds are being reinvested in another business asset (rollover relief). One of our specialists will be able to advise whether reliefs are available.
Finally, by organising your investments tax efficiently you may not pay any capital gains tax on the gains you make, such as holding shares in an ISA.
Do I pay capital gains tax on my family home?
If you live in a property, then you should get Principal Private Property relief (PPR) on the sale of your house. If you have a second or holiday home you may have to pay capital gains tax on the sale. If you have moved home and haven’t sold your previous home before you move into your new one, you may still get PPR.
Do I have to report capital gains?
You will have to report the gains you have made in a tax year on your tax return if they are above your annual exemption.
If you do not complete a tax return, and your gains are above your annual exemption you can report a capital gain using the ‘real time’ Capital Gains Tax Service on the GOV.UK website. If you complete a self assessment tax return you can report your gain on that.
You will need to report a gain, even if it is below your annual exemption if the proceeds for the asset was 4 time your annual exemption (greater than £48,000 for 2019/20) and you complete a self assessment tax return
For help with your capital gains tax, talk to one of our friendly experts who can help make sure that you pay the right amount of tax.
If you would like to see how we can help, please fill out the form below: