Capital Gains Tax (CGT) is essentially a tax you pay on the profits (‘gains’) you make when you sell, give away or dispose of something you own that has increased in value. Importantly, it’s the actual gain you make that’s taxed, not the overall amount of money you receive. CGT applies only to self-employed sole traders or business partnerships; Limited companies pay Corporation Tax on the profits they make from selling assets.
What is taxed
CGT is payable for example when you sell or dispose of shares which are held outside of a tax free wrapper, all or part of any business assets you own, when you transfer a property to someone else, swap an asset for something else or receive some form of compensation…The list goes on! Fortunately, most people are entitled to a tax free allowance (also known as the Annual Exempt Amount).
What you pay
The amount of CGT you pay depends on your tax free allowance and any other additional reliefs you have taken. The rates of CGT on any overall gains above the tax free allowance for 2014/15 are 18% (standard rate), 28% (higher rate) and 10% (Entrepreneur’s relief rate). Your annual tax free allowance for 2014/15 is £11,000, although the figure can change from one year to the next.
If you are struggling to assess your potential CGT liabilities, our team of tax consultants can help. Not only could you minimise your CGT bills, you may not have to worry about CGT ever again...
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