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CAPITAL
GAINS TAX

Personal Capital Gains

If you need help with capital gains tax calculations and compliance, please call us for a quick quote and no-obligation advice.

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Personal Capital Gains Tax

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In the United Kingdom, Capital Gains Tax from the sale of residential properties is calculated differently from many other Capital Gains Taxes. For these sales, you are taxed 18% – 28% of the profits gained from the sale of the property. These taxes do not apply to your home but apply when you sell buy-to-let properties, business premises, land, and inherited property. Essentially, these taxes apply when you sell any property that is not your home. If the property is a business asset, you may be eligible for tax relief, so ensure to seek advice from our professional tax accountant. If you’re a non-resident of the UK, you have 60 days to report the sale to HMRC and pay CGT or face interest charges and other penalties once the property is sold. Even if you calculate that you have no tax to pay, you must report this conveyance. The tax rate is the same as for residents of the UK.

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To help you manage your capital gains liability and minimise your tax payment, Tax Accountant can offer a variety of capital gains tax (CGT) services. Our team of specialist accountants can provide the following services:

Tax Planning: We can help you plan your asset sales or disposals to minimise your CGT liability, considering your annual exemption, tax rates, and any tax relief and allowances.

Calculation of CGT Liability: As experienced accountants, we can calculate your CGT liability based on the sale or disposal of your assets, taking into account the purchase price, CGT price, and any allowed costs.

Tax return preparation: We can complete and submit your self-assessment tax return, including declaring capital gains and identifying your CGT liability. We can also advise you on structuring instalment payments before a taxable event to reduce the tax you must pay in a lump sum.

Principal Private Residence Relief: We can advise you on whether you are eligible for Principal Private Residence Relief and help you claim the relief to reduce or eliminate your CGT liability on the sale of your main house.

Guidance on Tax-Free Investments: Our Team of Specialist Accountants can advise you on tax-free investments, such as ISAs, to estimate your CGT liability.

Business Property Relief: We can advise you on whether you are eligible for business property relief and help you claim the claim to reduce or eliminate your CGT liability on selling a business or agricultural property.

These are some of the capital gains tax services an accountant may offer. We can help you manage CGT’s complicated laws and regulations and give you guidance suited to your particular requirements and circumstances. As tax accountants, we have a wealth of knowledge and expertise to correctly calculate CGT on gains from selling your assets, stocks, or other valuable assets. Call us for a no-obligation quote.

Making intelligent decisions about when and how you sell assets and taking advantage of any tax allowances and reliefs available are all part of minimising your Capital Gains Tax (CGT) liability. Here are some strategies for reducing your CGT liability:

  1. Use your annual exemption: Take advantage of your annual CGT exemption, which allows you to make a certain amount of capital gains each year without paying tax.
  2. Gift assets: Consider gifting assets to a spouse or a charity, as gifts between spouses are exempt from CGT, and charity gifts are tax-free.
  3. Time your sales: Timing can be important when minimising your CGT liability. If you are a higher rate taxpayer, it may be advantageous to sell assets when your taxable income is lower.
  4. Use tax-free allowances: If you’re a resident of the UK, you may be eligible for various tax-free allowances, such as Entrepreneurs’ Relief or Investors’ Relief, which can reduce your CGT bill.
  5. Hold onto assets: If you don’t need to sell an asset, it may be more tax-efficient to hold onto it, as you will only incur a CGT liability once you dispose of it.
  6. Use ISAs and pension funds: Consider using ISAs and pension funds to hold assets, as these are exempt from CGT.

It’s important to note that every case is different, and the rules and regulations regarding CGT can change, so it’s always best to check with us before paying CGT.

Because there is no sale or disposal of an asset, inheriting a property in the United Kingdom does not result in a Capital Gains Tax (CGT) liability. Nonetheless, you may be liable to CGT if you sell, dispose of, or otherwise dispose of the inherited property and later make a profit.

Inherited property is usually valued at its market value on the date of inheritance, and this value becomes the new cost basis for computing CGT if the property is later sold. Therefore, if you inherit a property and sell it during the same tax year, you can minimise or eliminate your CGT liability by using your yearly exemption. However, if you sell the property in a future tax year, your CGT liability will be based on the profit you make and your taxable income for that year.

It is important to remember that the regulations involving CGT and inheritance can be complicated. Therefore, obtaining expert guidance from our tax specialist is always better to ensure you are informed of your duties and minimise your CGT liability.

For property sales made between 6 April 2020 and 26 October 2021, the deadline for paying CGT was 30 days after completion. As of 27 October 2021, if you sell a residential property in the UK, you must pay any Capital Gains Tax owed within 60 days of the completion of the sale or disposal. In addition, you must submit a ‘residential property CGT return’ to HMRC on UK property account detailing the sale price, any allowable expenses, and the amount of CGT due. 

Calculating Capital Gains Tax (CGT) in the UK can be a complex process, and the specific rules and rates can vary depending on the type of asset you are selling. Here’s a summary of how to calculate CGT for different kinds of assets:

  • For residential property sold on or after 6 April 2020, you’ll need to calculate the gain by subtracting the property cost (including any buying and selling costs, such as legal fees and estate agent fees) from the sale price. You can deduct your annual CGT allowance (£12,300 for the 2022/23 tax year) from the gain. The remaining amount is subject to CGT at 18% or 28%, depending on your income tax bracket. There are also special rules for properties that were previously your main home.
  • Commercial property rules are similar to residential property rules. You’ll need to calculate the gain by subtracting the cost of the property from the sale price and deducting any allowable expenses. Again, you can deduct your annual CGT allowance from the gain, and the remaining amount is subject to CGT at 18% or 28%, depending on your income tax bracket.
  • If you sell shares, you’ll need to calculate the gain by subtracting the cost of the shares (including any fees or commissions paid to buy and sell them) from the sale price. You can then deduct your annual CGT allowance from the gain. You won’t need to pay any CGT if the total gain is below the annual allowance. If it’s above the allowance, you must pay CGT at 10% or 20%, depending on your income tax bracket.

It’s worth noting that there are many factors that can affect your CGT liability, such as whether you’ve made any previous gains in the tax year, and whether you’ve used any tax-efficient strategies to reduce your liability. If you need help calculating your CGT, it’s a good idea to seek professional advice from our tax experts. 

It is possible to defer your Capital Gains Tax (CGT) liability by reinvesting your gains in certain qualified assets. This is known as “rollover relief” and is available for individuals and businesses. The terms are absolute, and if reinvestment conditions are broken, deferred gains will fall back, and tax becomes due immediately. The qualified assets that you can reinvest in to defer your CGT liability include the following:

  1. Another business asset: If you sell a business asset, you can reinvest the gains in another asset to defer the CGT liability. The asset must be used in the same trade as the original asset.
  2. Shares in Enterprise Investment Scheme (EIS) companies: You can defer CGT on gains by reinvesting in shares of qualifying EIS companies. EIS companies are small, high-risk companies eligible for certain tax breaks.
  3. Shares in Seed Enterprise Investment Scheme (SEIS) companies: Similar to EIS, you can defer CGT on gains by reinvesting in shares of qualifying SEIS companies. SEIS companies are even smaller, early-stage companies eligible for more generous tax breaks.
  4. Venture Capital Trusts (VCTs): VCTs are investment trusts that invest in small, unlisted companies. If you reinvest your gains in VCTs, you can defer CGT liability.

It’s important to note that while rollover relief can defer your CGT liability, you will still need to pay the tax eventually when you dispose of the new asset. Additionally, certain conditions must be met to qualify for rollover relief, and you should seek professional advice before making any decisions. 

If you have made a mistake and want to amend your tax returns, you must get in touch with HMRC and explain to them the nature of mistake or omission. 

It is always dependent on nature of mistake. If the amendment will result in correction of tax liability, then you must file an amended tax return. If you have omitted taxable gains and want to correct your records, you would need to file a disclosure

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