Capital Gains Tax Advice
What is Capital Gains Tax?
Capital gains tax (‘CGT’) is a form of tax that is charged on gains (i.e. profit) that you have made on items you have owned for more than one year and subsequently sold.
It is important to remember that CGT is not just chargeable on the sale of an asset; it may also apply to assets you give away to family members (excluding your spouse) where no money actually changes hands (in this instance, an estimate of the market value is substituted for the selling price).
Why do I need Capital Gains Tax advice?
Although CGT is applicable to the disposal of many assets, the most common examples are property and shares. Capital Gains Tax is not automatically deducted when an asset is sold and needs to be ‘self-reported’ to HMRC.
Generally any disposals are reported via an annual self-assessment tax return form, with the associated tax payable to HMRC by 31st January following the end of the tax year of the sale. However, for disposals of residential property there is now a separate online form which needs to be filed with HMRC within 60 days of the sale, with the associated tax paid at the same time.
Even if you have made a loss, it is still important to report this to HMRC otherwise you will not be able to utilise it against any future gains.
There are many different tax triggers, so it is important to be aware of what information should be declared. If you fail to notify HMRC and/or don’t provide accurate reports, you will be subject to penalties & interest, which can often be more than the tax payable in the first instance.
CGT legislation is a very complex area. Depending on the type of asset being sold, there may be several reliefs and exemptions available which could lead to significant tax savings. It is therefore recommended that you seek advice from your accountant if you are considering selling an asset.
What Exchange Accountants can do for you:
If you are considering selling, or have already sold, an asset and need advice on the possible tax implications of this, we can:
- Capital gains tax (‘CGT’) is a form of tax that may be charged on gains (i.e. profit) that you have made on assets you have owned and subsequently disposed of.
- Prepare a detailed CGT computation, highlighting the tax payable and relevant dates.
- Advise on any available reliefs or exemptions which may be relevant to your sale.
- Consult on the most tax efficient timing of any planned sales.
- Complete any separate HMRC forms that may be required (eg for residential property sales).
