Capital Gains Tax
What is capital Gains Tax (CGT)?
Capital Gains Tax (CGT) is the tax that becomes due on the gain or profit that you make when you sell an asset. There is a lot more to it then just calculating the difference between how much you bought something for to then how much you sold it for. There are basic allowances, asset specific allowances and certain expenses that can be utilised to reduce the tax. Furthermore, some assets allow you to defer any gain you make if you reinvest the proceeds into another certain asset. It’s a complex tax where the rules frequently change.
Here’s a list of some of the more common queried items that are tax free from CGT:
- Winnings
- Compensation
- Death
- ISAs and PEPs
- Life insurance and deferred annuities
- Private residences (your family home)
- Pension funds
- Chattels > £6k
- Motor Cars
Property Tax Specialist
We provide specialist Capital Gains Tax and accountancy advice to landlords and property investors, from buying/selling an asset, to structuring your company in the most tax efficient way. We frequently advise landlords on the benefits and drawbacks of creating a company for the buy to lets as opposed to holding them personally. The decisions made here will also affect Income Tax and Inheritance Tax. It’s difficult to find an accountancy firm where all of these taxes will be consistently handled by the same person and by the partner of the firm. This rarely happens anywhere else.
Capital Gains Tax planning
There are two different rates for a tax payer, a basic tax rate and the higher tax rate. If you are not a basic tax rate payer then you will be subject to paying the higher rate. So the amount of income you have received (i.e. employment, dividends and etc) will determine whether you will have to pay the higher rate. Your income and Income tax needs to be heavily considered when assessing Capital gains Tax decisions. For example, timing the sale of something, for example when your income is lower in that year could potentially save you a considerable amount of tax. Or another example could involve making sure you purchase the right balance of properties in joint names with your wife/family, which could also save you income tax on top of the Capital Gains Tax. There are many more examples of where effective Capital Gains tax planning can lead to huge tax savings.
Capital Gains Tax and Inheritance Tax (IHT) also share a close connection when it comes to tax planning. For example, as Capital Gains Tax is significantly lower than IHT, it may be more tax efficient to gift an asset in your lifetime and pay the lower capital gains tax, rather than leave it in your estate where you will subject the higher inheritance tax. Capital Gains considerations could also play a pivotal when setting up trusts and with so many other IHT instruments and decisions.
Like with most other taxes, familiarity is key in being able to identify optimum tax saving solutions which is difficult to do when there are different people/departments assigned to your various taxes, who come and go. This does not happen at Wiseborne.
Our Services
Capital Gains for individuals
Buy-to-let Property purchases and sales for investors and landlords
Transferring properties to children/family in tax efficient way
Restructuring Business/ Business sale
Advising on Shares and Capital Gains Tax
Capital Gains Tax advice for trusts
Capital Gains Tax advice for non-UK residents
Capital Gains Tax advice on overseas properties
Offsetting Capital Gains Tax losses
Capital Gains for Businesses
We can advise and help with gains that arise due to selling all or a part of the business which can include:
Land and Buildings
Fixtures & Fittings
Plant and Machinery
Shares
Registered Trademarks
Selling the goodwill of the business
Transferring properties in and out of the company
How much is it?
The fee will depend on the complexity of the case. Please contact us with your requirments and we’ll give you an idea of what the price will be.
Frequently asked questions
What’s a deferred gain? This does not mean that you do not pay tax. It means the tax is deferred and can can be settled later down the line, at an event or point in time defined set out by the allowance used.
Are investments in EIS schemes tax-free? Yes, they can be in certain circumstances.
Do I have to pay Capital Gains tax when selling/gifting my main home? If it’s your main residence and you’ve lived it in since you purchased it then you will not need to pay any Capital Gains Tax as you will be entitled to Principal Private Residence Relief. Furthermore, if you are gifting your home to i.e. your children, then it will not be included in your estate when it comes to Inheritance Tax as long as you survive for seven years after making this gift.
What happens when the person assigned to my tax planning leaves the firm? What’s unique about Wiseborne is that this is not something that you will need to worry about as the partner will be personally undertaking the work across all of your taxes. Your jobs wills not be allocated to an account manager or anybody else. We understand that there is no substitute to having the same exact experienced tax expert personally undertaking your tax work for many years to come and is why we adopt this approach.