Our advisors can consider your exposure to capital gains tax on the profits on the sale of buy to let houses, second homes, commercial property, businesses, shares and any other investments or assets.
Gains made on the disposal of most assets are subject to capital gains tax (CGT).
The level of CGT you pay is determined by the level of income tax you pay, the nature of the asset you are selling and any relief you might qualify for.
For residential property (unless full main residence relief applies) if you are a higher rate taxpayer you will be liable to CGT of 28% on the disposal of non-business assets, basic rate taxpayers will pay 18%. These rates will also be applicable for individuals who provide investment management services and receive certain Carried Interest returns.
For other types of asset, if you are a higher rate taxpayer you will be liable to CGT of 20% on the disposal of non-business assets, basic rate taxpayers will pay 10%.
If you have sold a business asset you may qualify for ‘Business Asset Disposal Relief’ (formerly Entrepreneurs Relief) at a CGT rate of 10% on profits of up to £1 million from 11 March 2020. For disposals prior to 11 March 2020 the limit was £10 million. The flat tax rate of 10% applies regardless of whether you are a basic, higher or additional rate taxpayer. Gains which exceed the lifetime limit of £1 million are taxed at the normal CGT rates.
Since 17 March 2016, Business Asset Disposal Relief has been extended to include external investors’ in unlisted trading companies. This is known as ‘Investors’ Relief’ and it applies on shares acquired after 17 March 2016 and are held for at least three years
If you have disposed of an asset or a sale or gift is being considered, we can offer CGT planning advice to mitigate your exposure to tax or we can simply calculate your tax exposure for you so that you are aware of your net position.
Where appropriate, our advice will seek to ensure:
• All available deductions are made when calculating your gain;
• You are made aware of all tax deferral opportunities e.g. Enterprise Investment Scheme and similar opportunities;
• All planning opportunities to maximise Business Asset Disposal Relief and Investors Relief are considered.
• Assets are valued appropriately for CGT purposes e.g. shares in a private company or transactions with connected persons;
• Holdover relief is claimed for gifts of certain assets
• Rollover relief is claimed for the replacement of business assets;
• Relief is claimed for assets of negligible value;
• Relief is claimed for losses on disposals of assets and on certain loans;
• Main residence relief and lettings relief are claimed as appropriate following the disposal of your principal private residence.
If you require our assistance with CGT planning please contact us at the earliest opportunity.