There are many ways to reduce your capital gains tax (CGT) liability. In this article, we will look at some of the most common options available to you.
- Make the most of your £12,000 (2019/20) annual CGT exemption.
- A “reported loss” on a “chargeable asset” can be deducted from the capital gains you made in the same tax year.
- You can pay less tax by using losses from previous years to reduce this year’s gains.
- Consider making a pension contribution to bring your capital gains tax liability down from 20% to the 10% that applies to basic rate taxpayers.
- Use the “Bed and ISA” or “Bed and SIPP (Self-Invested Personal Pension)” planning to realise gains up to the annual exemption by selling assets and then immediately buying them back within an ISA and SIPP.
Capital gains tax information you might find useful
CGT is a tax charge when you dispose of an asset that has increased in value. You don’t necessarily have to sell the asset, because CGT can also apply to gifts. The tax is on the profit you make-the gain-on and, not on the total amount you receive for the asset. Some assets don’t attract the tax and you don’t pay it if all the gains are under your annual tax-free allowance.
How CGT works
CGT is a tax on the profit when you dispose of an asset that has increased in value. The tax only applies to the gain and you don’t have to pay anything if all your gains in a year are below your tax-free allowance which currently stands at £12,000 in 2019-20. There are also some exemptions to CGT, for instance, you don’t usually pay tax on gifts to your spouse, civil partner or a charity.
With CGT there is some leeway too. You might have profited handsomely by selling an antique you picked up at auction, but your CGT liability will be based only on the profit above any unused part of your annual CGT allowance.
How Anstee & Co can help you manage your capital gains tax
We are a firm of Independent Financial Advisers (IFA’s). This means that we look at all the financial solutions open to you. The advice we offer is unbiased.
To find out more about possible capital gains tax savings, why not book a meeting with one of our financial planners. The cost of the initial meeting is covered by us. Meetings can be arranged at a time and location that is convenient for you. This may be at your home or one of our office located at: –
- Kettering, Northamptonshire
- Stamford, Lincolnshire
- London, Pall Mall, Greater London
Also, our financial planners live and make use of meeting rooms in: –
- Bedford, Bedfordshire
- Market Harborough, Leicestershire
- Northampton, Wellingborough, Brackley and Towcester in Northamptonshire.
The information contained in this newsletter is for information purposes only and does not constitute advice. No action should be taken on this information alone.