Capital Gains Tax Planning

Capital Gains Tax is encountered in many circumstances where you sell or give away a taxable asset that has increased in value. That could be a property, stocks or shares, or a painting. Our Capital Gains Tax accountants have the in-depth experience needed to help optimise your position if you have disposed of or are planning to dispose of an asset in order to maximise your after-tax sales proceeds.

Understanding Capital Gains Tax

The rate of Capital Gains Tax due on a disposal will depend on your circumstances including your income, any losses you may have incurred and the type of asset that you are disposing of. However, the Capital Gains Tax regime is complex with various reliefs, exemptions, or allowances that may or may not be applicable to your circumstances, but which can result in no tax being payable. The best known of these is principal private residence relief for the sale of your home.

In the UK, the main CGT rates for higher rate taxpayers are 24% on residential property, 20% on shares and other chargeable assets and 28% on carried interest. For basic rate taxpayers, the rare are 18% on residential property and carried interest, and 10% on shares and other gains. In the UK, the main rate of Capital Gains Tax is 28%. But there is also the 10% rate for business assets which qualify for Business Asset Disposal Relief (formerly known as Entrepreneurs’ Relief). Business Asset Disposal Relief is just that. If an entrepreneur disposes of their interest in a trading business, then the tax rate is 10% on the first £1 million of lifetime gains realised by each individual, subject always to meeting the detailed conditions for the relief.

How the proceeds of sale are reinvested may also defer any liability to Capital Gains Tax. Deferral relief is available for investments qualifying under the Enterprise Investment Scheme. Rollover relief is available for the reinvestment of sale proceeds of trading assets and holdover relief may allow the capital gain to pass from donor to donee.

If you are planning on disposing of an asset, or have already done so, please get in touch and speak to a member of our capital gains tax planning team.