<\/p>\n
What is Capital Gains Tax?<\/strong> How much is Capital Gains Tax?<\/strong> Firstly, you have a CGT tax-free allowance (of \u00a312,300 in the current tax year, though this can change). The UK tax year starts on the 6th April each year and ends on the 5th April the following year. If you make more than this in capital gains, you\u2019ll be charged a different rate depending on the asset that you sold and your income tax band.<\/p>\n Higher rate and additional rate taxpayers pay 20% CGT, or an increased 28% when selling residential property (other than a main residence, the home that you live in).<\/p>\n Basic rate taxpayers pay 10% CGT, increasing to 20% for residential property, unless their total capital gains (minus the 2021\/22 personal allowance \u00a312,570), when added to their taxable income, would place them in a higher tax bracket. If this is the case, they will pay the rates above.<\/p>\n How can you protect your assets from Capital Gains Tax?<\/strong> In some cases, you can protect your assets from CGT by keeping them within an Individual Savings Account (ISA) wrapper. Assets that can be held in an ISA include bonds, company shares, and investment funds. Any returns generated by these investments are free from Income Tax and CGT as long as they are held in an ISA.<\/p>\n However, you can contribute up to \u00a320,000 into an ISA each tax year, and once you have used your ISA allowance any further investments will not be protected.<\/p>\n How else can you minimise your Capital Gains Tax bill?<\/strong> Use your full tax-free Capital Gains Tax allowance<\/strong> Transfer assets to your partner<\/strong> Offset losses<\/strong> Sell and buy back<\/strong> Deduct costs<\/strong> Reduce your taxable income<\/strong> Use tax-efficient investment vehicles<\/strong> INFORMATION IS BASED ON OUR CURRENT UNDERSTANDING OF TAXATION LEGISLATION AND REGULATIONS. ANY LEVELS AND BASES OF, AND RELIEFS FROM, TAXATION ARE SUBJECT TO CHANGE.<\/p>\n THE VALUE OF INVESTMENTS AND INCOME FROM THEM MAY GO DOWN. YOU MAY NOT GET BACK THE ORIGINAL AMOUNT INVESTED.<\/p>\n PAST PERFORMANCE IS NOT A RELIABLE INDICATOR OF FUTURE PERFORMANCE.<\/p>\n THE FINANCIAL CONDUCT AUTHORITY DOES NOT REGULATE TAXATION & TRUST ADVICE.<\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":" How to minimise a Capital Gains Tax bill The rules around Capital Gains Tax (CGT) are complex and they differ depending on your financial situation. It\u2019s a complicated tax and as a result some people may get confused about how much they should expect to pay.<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"_links":{"self":[{"href":"https:\/\/www.clarksonhall.co.uk\/news\/index.php\/wp-json\/wp\/v2\/posts\/3492"}],"collection":[{"href":"https:\/\/www.clarksonhall.co.uk\/news\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.clarksonhall.co.uk\/news\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.clarksonhall.co.uk\/news\/index.php\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.clarksonhall.co.uk\/news\/index.php\/wp-json\/wp\/v2\/comments?post=3492"}],"version-history":[{"count":0,"href":"https:\/\/www.clarksonhall.co.uk\/news\/index.php\/wp-json\/wp\/v2\/posts\/3492\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.clarksonhall.co.uk\/news\/index.php\/wp-json\/wp\/v2\/media?parent=3492"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.clarksonhall.co.uk\/news\/index.php\/wp-json\/wp\/v2\/categories?post=3492"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.clarksonhall.co.uk\/news\/index.php\/wp-json\/wp\/v2\/tags?post=3492"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
\nCapital Gains Tax (CGT) is a tax payable on the profits (or \u2018capital gains\u2019) you make from selling certain assets. These assets include some property, items of value such as art, jewellery, or collectables, company shares or other investments, and businesses or business assets.<\/p>\n
\nThe rate of CGT you pay can vary, which sometimes catches people out.<\/p>\n
\nSome assets can be sold free from CGT, including your main residence (in most cases, though CGT can sometimes apply), and personal belongings worth less than \u00a36,000.<\/p>\n
\nFor assets that can\u2019t be sold free from CGT and can\u2019t be held within an ISA, there are other methods you could potentially use to minimise your CGT bill.<\/p>\n
\nIf you have any unused tax-free CGT allowance in one tax year (\u00a312,300 in tax year 2021\/22), it might be a good opportunity for you to realise some investment gains. If you can spread your gains over several years, you could choose to take only up to the tax-free CGT allowance in each year. The CGT allowance is reset every year and cannot be carried forward.<\/p>\n
\nIf appropriate, you could transfer assets to a legal partner without paying CGT and share assets between the two of you to take advantage of both of your CGT allowances. If you have exceeded both allowances, it might make sense for any partner who is in the lower tax bracket to claim further gains, as the rate of CGT they pay may be lower.<\/p>\n
\nIf you have sold any assets at a loss in the current tax year, you can offset this loss against other gains you have made. As long as you register a loss with HM Revenue & Customs, you can continue to offset it against any future gains, even in different tax years, until your gains exceed the loss amount.<\/p>\n
\nYou could sell an asset to a spouse and then immediately buy it back, which is known as the \u2018bed and spouse\u2019 technique. You could sell the assets, before immediately buying them back and protecting them in an ISA (the \u2018bed and ISA\u2019 technique). There is also the \u2018bed and SIPP\u2019 method. This method sees people saving for retirement sell their assets, before buying them back into a Self-Invested Personal Pension (SIPP).<\/p>\n
\nAny costs that you have incurred in the process of selling an asset can be deducted from the profit you have made when calculating the CGT due. This could include auction fees, solicitor\u2019s fees, stamp duty, et cetera.<\/p>\n
\nYour rate of Capital Gains Tax is based on your income. This means that you could lower your bill by lowering the Income Tax that you\u2019re eligible to pay. You could contribute more of your income into your pension pot, helping to avoid this money being taxed or by making charitable donations.<\/p>\n
\nWe\u2019ve already discussed Stocks & Shares ISAs, but another investment vehicle you could use to protect your wealth from CGT is a pension. Other investment vehicles are also available to help you manage Income Tax, CGT, and Inheritance Tax. However, due to the complex rules and variety of options available, you should always obtain professional financial advice before investing.<\/p>\n