Capital Gains Tax (CGT)
We provide Capital Gains Tax calculations and planning
Capital gains tax (CGT) may be due on the sale or disposal of most assets, subject to a few exceptions. The amount of tax due will depend on a number of factors:
What is the base cost (i.e. the price paid) for the asset?
Has the asset been sold at market value, or gifted to someone?
Do you have any losses brought forward or in the current year which could reduce any taxable gains?
What type of asset is it? For example, residential property gains are taxed at 18%/28% rather than the standard 10%/20%.
Are there any tax reliefs available, such as Principal Private Residence (PPR relief), Business Asset Disposal relief, gift hold-over relief, or chattels exemption?
Can you defer the payment of the tax by investing the gains into a qualifying investment?
What is your tax residence position?
Are the gains in excess of the available annual exemption (£12,300 for 2020/21)?
All of the above and more can not only impact how much tax is due, but also when it needs to be paid, and by whom. Taking advice in advance of any significant change in residence, property ownership, or family change (such as divorce or gifts to children) could significantly reduce your CGT liability on disposal.
New reporting regime for UK residential property – don’t get caught out!
For UK residential property disposals taking place since 6 April 2020, individuals, trustees, and personal representatives need to report the disposal and pay any CGT liability within 30 days of completion.
Historically, non-resident individuals only needed to report the disposal of UK residential property, but from 6 April 2020 non-resident individuals, trustees and personal representatives, also need to report disposals any interest in UK land, disposal of mixed use properties, and the disposal of shares that derive at least 75% of their value from UK land.
A new Capital Gains Tax on UK Property return should be submitted digitally where possible. We can assist with the calculations to consider any periods of residence or letting which may qualify for tax relief, capital enhancements, and any capital losses available in order to be able to complete the return. The rate of CGT due can depend on the level of other income in the tax year. As this may be unknown, the rate of tax applied should be based on a ‘reasonable estimate’ of the income of the individual in the tax year.
For tailored advice, or preparation of the CGT on UK property return, please get in touch.