Here at PD tax, our tax experts can assist individuals with a variety of Capital Gains Tax issues. From helping you navigate the intricacies of the law to ensuring you get the most out of the available allowances, reliefs, and deductions. We understand that capital gains tax can be challenging, but with our specialist team by your side, you can be confident in making informed decisions and ensuring compliance.
What is Capital Gains Tax
Capital gains tax (CGT) is payable on the disposal of assets made by individuals, trustees, personal representatives, and companies. This could include:
- Stocks and shares.
- UK land and buildings, both residential and commercial, which are not your main home.
- Business assets e.g., goodwill.
- Any currency other than sterling.
- Crypto assets.
- Personal possessions worth more than £6,000.
If an asset is sold, given away or otherwise disposed of, and that asset has made a profit or ‘gain’, then it is this ‘gain’ that is taxed, not the full amount of money received.
The chargeable gains of companies are liable to corporation tax, not CGT.
If any of these apply to you, don’t hesitate to reach out to our team for expert advice on understanding GCT, your annual exempt amount, and your overall CGT liability.
How much is capital gains tax and how do you calculate it?
For disposals other than by companies, there are four rates of capital gains tax, depending on who makes the disposal and the type of asset that is disposed of. Capital gains tax will be payable if the chargeable gain (i.e. net gains) for any tax year exceed ‘the annual exempt amount (“AEA”)’ for the year.
After this AEA is considered, the remaining chargeable amount is subject to different rates of CGT dependent upon what type of chargeable asset you have disposed of and what tax bracket the seller falls into (basic or higher/additional). Broadly speaking, capital gains tax on the disposal of residential property is higher than on other capital disposals.
For a brief calculation of your CGT visit GOV.UK’s capital gains tax UK calculator through the link: https://www.gov.uk/tax-sell-property/work-out-your-gain. However, for a more in-depth analysis of this and the possible ways you could of alleviate some or all your CGT liability consult with any of our specialist tax advisers by calling 0113 868 8115.
What allowances or reliefs exist to minimise your Capital Gains Tax Liability?
With careful planning it may be possible to reduce, defer, or relieve some or all the CGT liability arising through various allowances and reliefs that are available. Some of these could include:
- Business Asset Disposal Relief: on the sale of your business.
- Private Residence Relief:on the sale of your main residence.
- Lettings Relief: on the sale of your main residence when it has been let out.
- Incorporation Relief:on the incorporation of your sole trade or partnership.
- Gift Hold-Over Relief:may apply where you gift business assets to an individual or transfer assets into a trust.
- Roll-Over Relief:on the replacement of business assets.
- Investors’ Relief:on the sale of certain shares acquired by subscription.
How can PD Tax help?
It is important to ensure that full and timely advice is taken in respect of CGT. Discussing any proposed disposals with our specialist tax team in advance, will provide the best possible opportunity for us to work with you to minimise your tax liability and ensure the calculations are correctly prepared and reported to HMRC.
We can also advise on recent changes and/or expected changes to tax legislation and the impact this may have on any proposed transaction.
Our services include, but are not limited to:
- CGT calculations: We provide a comprehensive calculation of your potential capital gains, ensuring accuracy and compliance with the latest HMRC guidelines.
- Tax planning: Our experts offer strategic advice on how to minimise your capital gains liability through legitimate avenues.
- Documentation and reporting: Our team will assist in preparing all necessary documentation for CGT, guaranteeing timely and accurate reporting to HMRC.
Are there any recent or proposed capital gains tax changes?
Tax laws and regulations are constantly changing. The 2023-24 tax years, which runs from 6 April 2023 to 5 April 2024, will see changes to the CGT law, so it is advisable to consult with any of our specialist tax consultants for the most up-to-date information regarding CGT.
What are the different capital gains tax rates in the UK?
There are four rates of CGT in the UK, depending on who makes the disposal and the type of asset that is disposed of. Get in touch for a personalised summary and unique advice towards how best to offset your CGT.
What are the capital gains tax allowances and exemptions?
There are many exemptions and reliefs applying to CGT which may help relieve and legally limit the amount of tax you pay on the disposal of your asset. However, advice on CGT will inherently depend upon the nature of the asset involved and individual circumstances. Seeking professional advice from PD Tax can help you make the most of these allowances and help you see how best to proceed for tax purposes.
Do you pay capital gains tax overseas?
A general rule of thumb is that UK residents are obliged to pay CGT on disposal of assets worldwide. Also, non-UK residents who sell UK assets may have to pay CGT depending on individual circumstances and how long you have been a non-UK resident for. If you intend to leave the UK or arrive from overseas your CGT may be affected, so please do contact us, and speak to one of our expert tax advisers for more detail on this matter and to see what possible allowances and/or reliefs may be available to you.
Get in touch today:
If you have any queries or require assistance with CGT, please reach out to our team. Tapping into the knowledge of a tax specialist can be worthwhile, helping you maximise your financial potential and saving you hassle in the long term.