Capital Gains Tax
If you have disposed of assets for a sum in excess of that originally paid you may be liable to tax on the gain. It may even be that you have already paid the tax or that your accountant has informed you that Capital Gains Tax (CGT) is payable following a recent asset sale.
In any case it may be beneficial to obtain professional independent advice in relation to your financial affairs and get an insight into the many tax mitigating products available.
IF YOU ARE A BASIC RATE TAX PAYER, CGT IS CURRENTLY CHARGED AT 10% ON ANYTHING ABOVE THE ALLOWANCE (18% FOR RESIDENTIAL PROPERTY)
IF YOU ARE A HIGHER RATE TAX PAYER, CGT IS CURRENTLY CHARGED AT 20% ON ANYTHING ABOVE THE ALLOWANCE (28% FOR RESIDENTIAL PROPERTY)
CGT can arise from disposal of an investment property, disposal of a second home, disposal of a business or transfer/sale of assets or investments.
We discuss options for managing CGT liability, including the types of schemes that are currently available - such as Enterprise Investment Schemes (EIS). These schemes aim for capital preservation or investment growth whilst providing CGT deferral, Inheritance Tax (IHT) relief and income tax relief.
EXAMPLE – BUY-TO-LET PROPERTY
Mr and Mrs Brown sold their rental property for £180,000; double the original purchase price. From the table below, you can see that this generated a gain of £90,000.
Again, they each had an annual Capital Gains Tax allowance (£11,700 in 2018/19) so the chargeable gain was £66,600. Mr and Mrs Brown are basic rate tax payers so a 18% tax rate will be charged; resulting in a £11,988 bill to pay.
We discussed Enterprise Investment Schemes with Mr and Mrs Brown as a means of mitigating this liability, and having discussed the clients’ needs, suggested putting the whole amount (£66,600) into an Enterprise Investment Scheme.
The benefit of this investment was that the CGT liability was deferred and that the investors were able to receive up-front income tax relief of 30% of the investment value (capped at the total income tax paid in the year).
Rental Property Example
Original Purchase Price: £90,000
Sale Price: £180,000
Crystallised Gain: £90,000
Annual Allowance (x2): £11,700
Actual Gain: £66,600
Tax Charge: 18% (basic rate)
Amount to Pay: £11,988
If you have disposed of assets for a sum in excess of that originally paid you may be liable to tax on the gain. It may even be that you have already paid the tax or that your accountant has informed you that Capital Gains Tax (CGT) is payable following a recent asset sale.
In any case it may be beneficial to obtain professional independent advice in relation to your financial affairs and get an insight into the many tax mitigating products available.
IF YOU ARE A BASIC RATE TAX PAYER, CGT IS CURRENTLY CHARGED AT 10% ON ANYTHING ABOVE THE ALLOWANCE (18% FOR RESIDENTIAL PROPERTY)
IF YOU ARE A HIGHER RATE TAX PAYER, CGT IS CURRENTLY CHARGED AT 20% ON ANYTHING ABOVE THE ALLOWANCE (28% FOR RESIDENTIAL PROPERTY)
CGT can arise from disposal of an investment property, disposal of a second home, disposal of a business or transfer/sale of assets or investments.
We discuss options for managing CGT liability, including the types of schemes that are currently available - such as Enterprise Investment Schemes (EIS). These schemes aim for capital preservation or investment growth whilst providing CGT deferral, Inheritance Tax (IHT) relief and income tax relief.
EXAMPLE – BUY-TO-LET PROPERTY
Mr and Mrs Brown sold their rental property for £180,000; double the original purchase price. From the table below, you can see that this generated a gain of £90,000.
Again, they each had an annual Capital Gains Tax allowance (£11,700 in 2018/19) so the chargeable gain was £66,600. Mr and Mrs Brown are basic rate tax payers so a 18% tax rate will be charged; resulting in a £11,988 bill to pay.
We discussed Enterprise Investment Schemes with Mr and Mrs Brown as a means of mitigating this liability, and having discussed the clients’ needs, suggested putting the whole amount (£66,600) into an Enterprise Investment Scheme.
The benefit of this investment was that the CGT liability was deferred and that the investors were able to receive up-front income tax relief of 30% of the investment value (capped at the total income tax paid in the year).
Rental Property Example
Original Purchase Price: £90,000
Sale Price: £180,000
Crystallised Gain: £90,000
Annual Allowance (x2): £11,700
Actual Gain: £66,600
Tax Charge: 18% (basic rate)
Amount to Pay: £11,988
Interested in this service?
We are happy to carry out meetings in person, over the telephone or by your preferred virtual platform.
A classic approach
Communication
We strongly believe in the benefits of developing long-lasting relationships with our clients.
We aim to be approachable, easily contactable and offer a broad, inter-discipline, assessment of client needs. We are happy to meet via telephone or virtual meeting, but still prioritise face-to-face meetings where possible.
Collaboration
We work closely across our departments to ensure that specialist knowledge and experience is accessed; when queries arise, there will always be someone available who understands and can deal with your concerns.
We are also keen to work alongside other key stakeholders and individuals; land agents, accountants, your existing solicitor or financial adviser, and of course, your family.
Community
As a firm we are keen to promote and involve ourselves in the community, and to support local charities and initiatives, such as Jeremiah’s Journey, St. Lukes, the Plymouth Argyle Community Trust (Project 35), Emotional Logic and the Ivybridge Brewery.
The South West is a beautiful places to live and we are proud to be based here, we’re therefore keen to help where we can.
Testimonials
“We used SW Law and Finance for equity release, and what can be a life-changing process was explained in detail, with excellent professionalism”
.jpg)
“We could not have had a more helpful and courteous experience. I would definitely recommend to others”
“An outstanding and friendly service as always, thank you”
“Excellent. Friendly staff and very professional. Thank you”
Contact us
Lee Mill Industrial Estate
Ivybridge, Devon
PL21 9GD
United Kingdom
