CAPITAL GAINS TAX

 

Capital gains tax (CGT) arises when you dispose of certain assets that have increased in value.  Assets such as cars, UK Government stock, qualifying corporate bonds (certain types of debenture or loan notes) and what are termed as ‘wasting assets’ are exempt from CGT, even if they increase in value.

 

There are also exemptions on transfers between husband and wife and between civil partners, and for gains made on the sale of your principal private residence. Gifts to charities and personal belongings where the sale value is less than £6,000 are also exempt.

 

The sale of shares, second homes or other property, along with antiques and jewellery are likely to attract CGT if they have gained in value. Please seek advice if you need assurance regarding which assets are likely to be subject to CGT.

Once the profit on sale, or gain, has been identified, an annual allowance of £10,900 (for 2013/14) is made per taxable person, after which any remaining gains are taxed at 18% for lower rate tax payers and 28% for higher rate tax payers (for 2013/14).

 

CGT is paid by 31 January, following the close of the tax year you are calculating. So for 2013/14, CGT returns and payment is due by 31 January 2015.

 

The CGT declaration will normally be made at the same time as your self assessment tax return, however if you don’t normally complete a tax return, or you might have made some capital losses, it would be wise to consult a tax advisor who can help you with the best course of action.

 

Finally, where a person disposes of a business or part of a business, business assets at cessation, an interest in a partnership or certain share or securities, entrepreneurs relief may be available, which has the effect of reducing the CGT tax rate to 10%. There is a lifetime limit of £10 million on such gains, after which normal CGT rates apply.

 

If any of these situation apply to you, and you need some help in clarifying your tax position, please contact us by

 

For more information from HMRC, please see