When you sell something you make a profit on for example, if you sell your property, shares, personal possessions of more than £6000, or your business assets and they have increased in value you will have pay CGT on the gain.
If you want to reduce your CGT bill and get the maximum financial benefit from your sales you can consider the following options:
1. UTILISE THE LOSSES
Losses made in the previous 4 years can be offset against the gains made and therefore the CGT bill can be reduced. Therefore, when calculating your tax bill you can deduct capital losses from the capital gains and you will only have to pay CGT on the reduced amount. If you are selling business asset consider selling the poor performing assets when you are selling high performing assets to reduce the tax bill.
2. DON`T SELL THE SHARES ALL AT ONCE-MAXIMISE THE USE OF ANNUAL ALLOWANCES
Each year an annual allowance is available to you. For the tax year 2020/21 this is £12 300. This means you can make a gain of up to this amount without giving any CGT. However, this annual allowance which is available each year cannot be carried forward.
It would be wise to use this annual allowance each year by doing a bit of planning,
Instead of selling shares all at once it will be wise if you can spread the sale of the shares over one or two tax years. In this way your gain can come within the annual allowance and you might save some money which you might be otherwise be paying in your taxes.
3. TRANSFER TO YOUR SPOUSE
You can transfer the shares to your spouse by selling them or giving them as a gift without having to pay CGT on the transfer.
4. TAKE ADVANTAGE OF THE INVESTORS RELIEF
Investor’s relief is available to you if you have invested in the ordinary shares of an unlisted company. Provided that you have held the shares for a minimum of 3 years you can pay a tax of 10 % on any gains made when you sell the shares.
5. INVESTING IN TAX EFFICIENT PROGRAMMES
If you are ready to take the risk you take the risk by investing in EIS or Venture Capital Trusts. These provide funding to small companies. By investing in such companies you will be eligible to get CGT relief.
There are other ways in which CGT bill can be reduced, if you are planning to sell your assets and need a financial expert advice, don’t hesitate to call Taxaccolega at 020 8127 0728. Our expert team will provide you with the most tax efficient advice or drop a message here and we will get in touch with you.