Capital Gains Tax is a tax on the profit when you sell (or ‘dispose of’) something (an ‘asset’) that has increased in value, such as a second home, art, antiques and shares. It’s the gain you make that is taxed, not the amount of money you receive.
For example, if you bought a painting for £5,000 and sold it later for £25,000, you made a gain of £20,000 (£25,000 minus £5,000).
In the 2018-19 tax year capital gains under £11,700 are tax-free. Married couples and civil partners who own assets jointly can claim a double allowance of £23,400.
This chart explains the rate of capital gains tax you will pay as a basic-rate and higher-rate taxpayer:
It is important to note that you can’t add your tax-free allowances together for different years. If you don’t use the allowance within the tax year, it is lost forever.
Whether you are looking to save on capital gains tax, income tax, inheritance tax, or all three, there are various legitimate tax planning opportunities available to you.
For more information, please contact your usual Beavis Morgan Partner.