Capital Gains Tax for Individuals

A Basic understanding of the Capital Gains Tax for Individuals

Note: (A separate blog will be published for CGT for companies)

Defining Capital Gains Tax (CGT)

CGT is a kind of tax on the profit made from the sale of an asset. CGT is payable when a person sells an asset for a profit after the item’s value has improved.

Who is liable for Capital Gains Tax for Individuals?

If an individual sells assets for more than they were originally purchased for. A capital gains tax (CGT) obligation will occur since the gain exceeds the current annual exemption level of £12,300.

Depending on the reliefs at your disposal, we will assist you in minimizing or eliminating the CGT.

CGT Rates

The portion of gains that come in
1. Basic rate tax band is taxed at 10% if non-residential property and 18% if a residential property
2. Higher rate tax band is taxed at 20% if non-residential property and 28% if a residential property

When to pay: Capital Gains Tax for Individuals

The timeframe for submitting a CGT Payment on Property Disposition return is within sixty days of the sale’s completion. Please see below the list of penalties in case of late filing:

  1. £100 if the return is filed more than 60 days after the transaction closes.
  2. £300 or 5% of the tax due, whichever is greater. It will be calculated for returns filed more than six months after the transaction closes.
  3. An additional late filing penalty of £300 or 5% of the tax due. Whichever is higher, will be calculated for returns filed more than 12 months after the actual transaction date.

(For complete procedure, please give a call at 02071559545)

Our seasoned tax experts will examine all options for lowering your tax liability while keeping all reliefs in mind. One of our areas of expertise is:

To reduce the CGT:

  1. Using all of your annual exempt amounts.
  2. Taking use of all allowable tax deductions (including “banked” indexation allowance and attorney’s fees, for example).
  3. Maximize your chances of receiving any available reliefs (such as the entrepreneur’s relief, the Principle Private residence relief, the hold-over relief, and the rollover relief) by using of all available reliefs (based on eligibility criteria).
  4. Examining the potential benefits of trusts and pension funds for paying capital gains tax
  5. Investigating the potential for using accumulated losses to offset a CGT liability (capital loss relief).
  6. Giving guidance on exemptions and rules applicable to a certain sector (such as the new CGT rules for non-resident landlords).
  7. Wills advice; touchy subject, but sometimes a necessary tool for planning.
  8. We provide information on how to transfer assets in the case of a divorce and advice on how to own assets to maximise relief for families or between husband and wife.
  9. To avoid any unanticipated UK capital gains tax, we provide planning assistance to both domiciled and non-domiciled people considering relocation.

Delaying capital gains tax payments may be done in a few different ways:

  1. Providing guidance on how to best schedule upcoming sales in order to take advantage of available exclusions and reliefs (or spread these over more than one tax year). For investments and sales related to the Seed Enterprise Investment Scheme (SEIS) or the Enterprise Investment Scheme (EIS), capital gains deferral relief may be provided; however, the timing is critical to guarantee that the relief is in place for the appropriate period.
  2. Offering guidance on how capital gains payments may be postponed by reinvestment and the use of EIS deferral relief, rollover relief, or holdover relief.

We will be here to help you through the whole process of determining your capital gains tax obligation, an essential component of tax planning. To further save you time and money, our highly experienced professionals will also deal with HMRC on your behalf, since they have extensive expertise in tax counseling and an affable, professional demeanor. Don’t wait to get in contact with us if you have any questions regarding our personal tax counseling services, would want to schedule a no-cost consultation, or need a firm price estimate.