Capital Gains Tax “CGT”

Capital gains tax (CGT) is a tax on the increase in the value of your assets over the time that you have owned them including properties that you rent out, antiques or shares but you don’t have to pay CGT if you sell a car, or if you make a profit on selling the home you live in.

Tax Consultancy

Giving non cash assets to other members of your family will be charged to capital gains tax (CGT). The tax is worked out as if you had sold the asset for full market value, which can be unexpected. Gifts involve Inheritance Tax issues as well as CGT . Business assets may qualify for special reliefs. It may be worth creating a Trust in this context, as they can reduce the CGT charge and provide wider protections.

Gifts of assets between spouses do not create a CGT charge unless you are separated. However, if a new spouse takes a share in a joint mortgage don’t forget to check for Stamp Duty Land Tax issues. The other exception is for giving assets to Charities.

There are CGT planning opportunities if you are interested in specialised investments. If you have made a large gain and you decide to invest in qualifying shares in Enterprise Investment Scheme Companies or Seed Enterprise Investment Scheme shares you may delay the original charge to CGT.

We also advise on new CGT charges for non UK residents, individuals and companies, who are selling UK residential property (NRCGT) These gains can be worked out in a variety of ways – we identify what works best for you. Latest proposals will also require non residents to pay CGT on sales of commercial property from April 2019.

If you are a UK resident selling property elsewhere in the world, you will usually pay a CGT equivalent both overseas and in the UK. We can help minimise the total burden with Double Tax Relief claims.

Capital Gains Tax Basics (CGT)

You may pay CGT if you make a profit on selling assets like rental properties, or shares, but not cars.

You must report transactions to HMRC if proceeds are over the reporting limit or if profits are over your annual exemption.   If you have made a loss we can help you claim reliefs.   

Sharing ownership of assets between married couples or civil partners can be a simple and effective strategy to reduce tax charges, especially when assets are sold.  The basic position is that spouses own joint assets in equal shares.  This can be varied, but you have to do the right form filling and have legal documentation.  If partners are not married then tax rules are different – not just for CGT but also for Inheritance Tax.

If you have sold something you inherited or valuable antiques then you can benefit from advice about how gains are worked out.  Assets given to you by a spouse before 6 April 2008 could have an extra deduction in working out the gain: it is worth checking.   

Selling your home is usually tax free, but not always.  If the property has a lot of land attached there could be a tax charge.  If you spent time away or rented it out for a period this can mean CGT is payable.  Selling a leasehold property makes the tax calculations more complicated as this brings you into the specialised rules about wasting assets.

If selling your house or garden to a house developer and the deal gives you a future share of their development profit, this “slice of the action” deal will be charged to income tax rather than CGT.

We can provide peace of mind by making sure your tax return discloses your CGT transactions correctly.

More Capital Gains tax topics

You may also incur CGT if you give assets to other members of your family, unless you give cash rather than assets.  The tax is worked out as if you had sold them the asset for full market value, which can be unexpected.  Gifts involve Inheritance Tax issues as well as CGT so there is much to think about.  

The main exception to this is gifts of assets between spouses – which are free of tax charges unless you are separating.   However, if a spouse takes over a share in a joint mortgage don’t forget to check for Stamp Duty Land Tax issues.   

The other exception is for giving assets to Charities, although there can be tax charges if the Charity pays you more for the asset than it originally cost you.

There are CGT planning opportunities if you are interested in specialised investments.  If you have made a gain and then, after taking independent financial advice, you decide to invest in qualifying shares in Enterprise Investment Scheme Companies or Seed Enterprise Investment Scheme shares you delay the original charge to CGT.

We also advise on new CGT charges for non UK residents selling UK residential property (NRCGT)  These gains can be worked out in a variety of ways – we identify what works best for you.   Latest proposals will also require non residents to pay CGT on sales of commercial property from April 2019.

If you are a UK resident selling property elsewhere in the world, you will usually pay a CGT equivalent both overseas and in the UK.  We can help minimise the total burden with Double Tax Relief claims.

Come and talk before you sell or give away assets. Effective tax planning steps need to be considered before you sell.

CGT and Businesses

Do you intend to sell your business?   Our valuation expertise can guide you on how much it might be worth.  Early planning can implement share schemes so key employees become stakeholders in your future success.

If you sell shares in your trading business and meet all requirements for Entrepreneurs’ Relief (ER) your profit on the sale is taxed at 10% subject to a lifetime limit.  Planning ahead will maximise your return.  

Start by checking all family shareholdings meet ER requirements ( at least 5% of shares, also an employee or director, and have owned shares for 12 months ).  Are there any shareholding with restricted rights ?  Further reviews can spot and resolve issues that risk ER. – Is the business’s commercial property owned personally  ? ER on this part of the deal can be lost if rent has been paid.  Does the company hold too many non trading investments ?  Are you planning to restart a new and similar business after the sale ?

It’s also worth reviewing factors that a buyer will use to knock down the sale price.  Look out for PAYE or VAT problems to defuse before you start to negotiate.  Typical examples include “pool cars” that are really taxable benefits, incorrect past VAT recoveries, and mistakes in VAT treatments of international sales of goods / services.

We work with your lawyers to make sure the sale offer and earn out is structured tax efficiently for you, and anticipate likely negotiation points.  

Alternatively you may intend to pass on your business to a younger generation.  This  sucession planning needs a different balance of emphasis between Inheritance Tax and CGT.

For corporate groups we advise on tax efficient sales of subsidiaries, and group reliefs for “rollover” claims to reduce CGT where business assets are sold and replaced.

Have any questions?

Contact your local office and a member of our team will be able to assist you with your query.

Book a Meeting

If you would like to discuss further, please book a meeting with an experienced member of our team. Simply let us know when’s best for you and we will get in touch to arrange a suitable time.




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