Capital Gains tax Accountant
Capital Gains Tax Expertise: Navigate Your Tax Obligations with Confidence at Taxaccolega.
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Taxaccolega is one of the best accounting firms in Croydon. Our team of experienced professionals is dedicated to helping clients achieve financial transparency in all tax matters.
At Taxaccolega many of our clients seek expert guidance on CGT, a vital aspect of managing their investments and assets. Our expert team of accountants specializes in providing comprehensive CGT advice, helping the individuals and businesses to deal with the complexities of asset disposal, tax relief and tax exemptions. We at Taxaccolega make sure that our clients get the best advice on Capital Gains Tax when they are selling their assets.
Whether you are a business owner or an individual selling your possessions worth over £6000, home owner, investor (investing in property , cryptocurrencies and shares other than ISA or PEP), you will be impacted by Capitals Gains Tax when you sell these assets. You need to understand CGT so you are fully tax compliant and you can mitigate your tax burden, m aximise your profits and optimise your financial planning.
WHAT IS CGT(capital gains tax)
Capital gains tax is a tax which is paid when you dispose off an asset at a profit. The profit made on the selling of an asset is the chargeable profit, which means that capital gains tax will be paid on the profit made and not on the value of the asset.
You do not have to pay capital gains tax if your overall gains of the year are above your tax free allowance which is £3000 for the tax year 2024/2025.
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CAPITAL GAINS TAX FOR INDIVIDUALS
WHEN WILL I BE LIABLE TO PAY CGT?
You will be liable to pay CGT if you sell an asset at a price higher than what you paid for it, transfer an asset to someone(other than your spouse or civil partner), when you sell an inherited asset , when you exchange an asset and if you receive a compensation for a damaged or lost item and the compensation is higher than the original price.
How much CGT do I have to pay ?
The amount of CGT you have to pay depends on which income band you are at. If your total income after adding the capital gains and subtracting any losses or reliefs falls within the basic rate band you w ill pay 10% on the capital gains made (18% on residential property and carried interest). However, if your total income after adding the capital gains and subtracting any losses and reliefs falls within the higher and additional rate band you will pay 20% on your gains from other chargeable assets(24% on your gains from residential property and 28% on the carried interest).The amount of CGT you have to pay depends on which income band you are at. If your total income after adding the capital gains and subtracting any losses or reliefs falls within the basic rate band you w ill pay 10% on the capital gains made (18% on residential property and carried interest). However, if your total income after adding the capital gains and subtracting any losses and reliefs falls within the higher and additional rate band you will pay 20% on your gains from other chargeable assets(24% on your gains from residential property and 28% on the carried interest).
CGT for individuals selling property
We get a lot of clients who want to know the tax implications of selling their property which is not their main residence. Most of them have a very little tax knowledge because they are accidental landlords through inheritance or marriage. Without proper guidance they can end up paying heavy tax bills. We at Taxaccolega look at your individual circumstances and advise accordingly on the reliefs available to you.
We often advice on the structure the buy to let property is held. For example, some could be benefitted financially if the buy to let property is held in a company, while for others personal ownership of the property could be more efficient. If you need advice on the most efficient tax structure please donot hesitate to contact Taxaccolega, the best accountants in London.
The Reliefs available to individuals selling property
PRIVATE RESIDENCE RELIEF
If the individuals sell their property which was their main residence they don’t have to pay any CGT provided they meet all the conditions. For example you have one home and you have lived in it as your main home, you have not used it mainly for the business, you have not rented any part of the house for any period of time.
LETTING RELIEF
Letting relief is available to individuals who have rented their main residence. Relief will be available for all the years you have lived in your own home and there is also a 9 months grace period. Relief will be available for the last 9 months you owned the property whether or not you lived in that house. If you claim letting relief you get the lowest of the following :
- The same amount you got in PPR
- £4000
- The same amount as a chargeable gain you made while letting part of your home.
ANNUAL ALLOWANCE
As of tax year 2004/2005 each individual gets an annual allowance of £ 3000. If you are living with your spouse,you each get an annual allowance of £3000. The allowance cannot be deferred. The spouses are supposed to pay CGT on the gain of their own assets, however the transfer of an asset to your spouse does not give rise to a gain or a loss . If you need more information on how to manage your allowance please contact our expert team of accountants at Taxaccolega.
CGT for overseas property
If you are a UK resident and you sell overseas property you need to report it to HMRC and pay CGT on it. Non-residents will also have to pay tax on the overseas property if they return to UK within 5 years of leaving. You will be eligible for a relief if you are paying tax in the other country as well.
CAPITAL GAINS TAX FOR BUSINESS
Our expert team of accountants at Taxaccolega can advise businesses and shareholders on capital gains tax when they sell all or part of their business assets. The business assets that may give rise to CGT are :
- Land and buildings
- Fixtures and fittings
- Plant and machinery
- Shares
- Registered trademarks
- Goodwill
There are ways to reduce the tax burden by applying the reliefs available.
THE RELIEFS AVAILABLE TO BUSINESSES
BUSINESS ASSET DISPOSAL RELIEF:
- When selling business or part of the business
If you are eligible for Business asset disposal relief (Entrepreneur’s relief)you will pay 10% on all gains on qualifying assets. To be eligible for business asset disposal relief you should be a sole trader or a partner for at least 2 years and you should have owned the business for at least 2 years. If you are closing your business you should dispose off your business assets within 3 years to qualify for the relief.
- When selling shares
To pay CGT at the reduced rate(10%) you must be an employee or office holder of the company for at least 2 years. And the company’s main activities are in trading. If these 2 conditions are met the n you are eligible for Business asset disposal relief and you can reduce your tax bill.
GIFT HOLDOVER RELIEF:
This relief allows you to defer paying CGT when you give away certain assets such as business assets or shares in an unlisted company as a gift basically to help the buyer. CGT will be payable when the recipient of the gift disposes off the assets.
ENTERPRISE INVESTMENT SCHEME RELIEF
By investing in a qualifying company under EIS you can defer CGT on gains that are reinvested in EIS. Also gains on EIS shares held for at least 3 years can be CGT free.
CAPITAL GAINS TAX ON GIFTS
The normal rules of CGT apply when you give a gift to anyone except there is no CGT when you give a gift to your spouse or you give gift to a charity.
CAPITAL GAINS ON INHERITED PROPERTY
Capital gains tax is paid on the inherited property in the same way as any other property. However, if the property is residential you might be able to claim the private residence relief and the letting relief. Our team at Taxaccolega can advise you on how much capital gains tax you need to pay on your inherited property.
WHEN DO I HAVE TO REPORT MY GAINS TO HMRC AND WHEN DO I HAVE TO PAY ?
You need to report any gains in your self-assessment tax return in the following tax year in which the gain was made. After submitting the return HMRC will tell you how much you owe and when you have to pay. The deadline for submitting an online self-assessment tax return is 31 Jan 2025 if you are submitting paper tax return you sh ould do it by midnight 31 Oct 202 4.
If you owe CGT on the sale of a property, you must report and pay it within 60 days of sale otherwise you will have to pay a penalty.
REPORTING LOSSES
When you report a loss on self-assessment tax return, the amount is deducted from the gains made in the same tax year. Any unused losses can be forwarded to future years, You can also use any unused losses from the previous years.
If you have any questions, please do not hesitate to contact Taxaccolega at 020 8127 0728 or email us at info@taxaccolega.co.uk