Capital Gains Tax

Tax on Assets

Let us guide you through the complexities of capital gains taxation, ensuring you benefit from every tax-saving opportunity while maintaining compliance effortlessly.

Are you tired of the complexities of Capital Gains Tax? Our team of experts is here to help! We understand that managing your assets and understanding tax implications can be overwhelming, but we commit to making it easy for you.

Our goal is to help you navigate the tax landscape easily while maximising your returns and minimising your tax liabilities. We don’t just want to save you from the burden of taxes; we want to enhance your overall financial success. By analysing your unique investment portfolio, we identify opportunities to reduce your Capital Gains Tax, such as leveraging long-term investment benefits.

Partner with us and experience how our expertise can transform your tax obligations into financial advantages. Our commitment is to turn the complexity of Capital Gains Tax into tangible savings for you. With our guidance, you’ll understand the essentials of Capital Gains Tax and how to make it work in your favour.

Frequently Asked Questions

What is Capital Gains Tax?
When you sell or give away an asset that has increased in value while you own it, you have to pay capital gains tax on your profit. CGT is charged for selling residential properties that are not your main home. This includes buy-to-let properties, second homes, and rental properties.

In the UK, you may not have to pay Capital Gains Tax (CGT) on the sale of a property that has been your primary residence for the entire duration of your ownership. This exemption is known as Principal Private Residence relief (PPR).

Calculating Capital Gains Tax (CGT) in the UK involves determining the disposal value (proceeds from selling an asset minus associated costs) and subtracting the acquisition cost (initial purchase price plus related expenses and improvements). This calculation yields the capital gain. Exemptions and allowances, like the annual tax-free allowance, Principal Private Residence Relief (PPR), lettings relief, and Entrepreneurs' Relief, can reduce the CGT liability. The applicable tax rate depends on your overall income and the type of asset, with different rates for residential property and other assets.

Gift Hold-Over Relief, a special tax provision in the UK, is designed to simplify transferring assets like property or shares as gifts or during business changes. With this relief, you can postpone paying Capital Gains Tax on the profit from such transfers, deferring the tax until later. This means you don’t have to worry about immediate tax payments when you give a gift, but it’s essential to note that the recipient may have to pay the tax when they sell the asset down the road. It’s a valuable tool for families and businesses looking to pass on assets upfront without facing significant tax bills. However, Gift Hold-Over Relief has specific rules and conditions that must be followed. We recommend consulting with our tax experts to ensure you’re making the most of this relief and complying with the requirements.

The amount you pay depends on the type of asset you sold and the tax band that applies once the gain is added to your taxable income.

The CGT is 10% or 18% if you’re a basic-rate taxpayer. Higher or additional rate taxpayers are charged either 20% or 28%. If you’re a basic-rate taxpayer but the gain pushes you over the higher-rate threshold, you will pay CGT at both rates.

Most assets are taxed at 10% or 20%, depending on your tax rate. However, if you sell residential property that doesn’t qualify for private residence relief, you will be taxed at 18% or 28%.

You can apply for a special rate of 10% if you sell certain business assets like shares. This is called business asset disposal relief (previously known as entrepreneurs’ relief).

The CGT Annual Exemption amount is the threshold below which an individual does not have to pay Capital Gains Tax (CGT) on profits from the sale of assets. The government sets this allowance and can vary each tax year.

Business Assets Disposal Relief (formerly Entrepreneurs’ Relief) offers a reduced Capital Gains Tax rate of 10% on gains from selling qualifying business assets in the UK, up to a lifetime limit of £1 million. Eligibility requires meeting specific criteria, including a minimum two-year ownership, at least a 5% stake for shareholders, and being an employee or director of the trading company. The relief applies to sales of all or part of your businesses, shares in a trading company or holding company of a trading group, and certain assets related to the business.

If you sold a residential property on or after 6 April 2020, you need to report any gain and pay CGT:

  • Within 60 days if sold on or after 27 October 2021.
  • Within 30 days if sold between 6 April 2020 and 26 October 2021.

If you sold it before 6 April 2020, you need to report the gain in your Self Assessment tax return instead.

Other capital Gains.

For capital gain not from a residential property sold after 6th April 2020, you have two options to report the gain:

You need to report any gain by 31st December of the following tax year and pay it by 31st January. For example, you need to report the gain made in 2023-2024 by 31st December 2024 and pay it by 31st January 2025.