When it comes to capital gains tax, it’s all in the planning. Planning will help reduce potential issues before they arise and help maximise available allowances. Our expert tax planning solicitors are on hand to help you plan for the future disposal of assets by considering the current and future tax implications.
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Our tax planning experts can help you plan the disposal of assets, so you can avoid unexpected tax bills or at least minimise them.
Capital Gains Tax explained
Capital gains tax is usually applied to any profit you make from the disposal of assets. For example, if you bought a house for £100,000 and sold it five years later for £150,000, you may have to pay tax on the £50,000 you gained during your ownership.
It’s important to remember that you don’t have to sell the asset to have a capital gain.
The tax would still be payable if you were to give it away. Let’s say instead of selling the house in the example above; you gifted it to your son as a graduation present. In this scenario, you may still receive a tax bill even though no money has changed hands.
Careful Planning
Our tax planning experts can help you plan the disposal of assets, so you can avoid unexpected tax bills or at least minimise them.
The key is thinking ahead and taking advice when you first acquire the asset, not at the point of disposal.
We can advise you on how best to proceed to avoid problems when the transaction completes.
If you are selling your primary residence, it is usually exempt from capital gains tax. This is one of the most valuable reliefs you will likely benefit from in your lifetime.
Individuals with multiple properties can choose which one carries the exemption, and the relief can also apply to holiday homes in the right circumstances.
Trusts can also avoid or defer tax charges if the property is owned by trustees and occupied by one of the beneficiaries as their primary residence. Even simple planning techniques, such as transferring assets between spouses or civil partners, can significantly reduce your tax bill.
Selling Land
If you sell some of your garden as building land (less than half a hectare) but continue to own the property to which it originally belonged, the principal residence exemption will still apply.
However, if the total area exceeds half a hectare and some are sold, you have to be able to demonstrate the parcel you disposed of was needed for the reasonable enjoyment of your property, and this can be difficult as you are prepared to sell it off!
Capital Gains Tax FAQs
Next Steps
Our tax planning specialists are ready to guide you through the process. Get in touch with us today to speak to our team. Call us on 0114 218 4391, email our Client Services team PrivateClient.ClientServices@ or complete our online enquiry form.
More Information
Capital Gains Tax: what you pay it on, rates and allowances – Gov.co.uk
