Capital Gains Tax (CGT)


What is Capital Gains Tax?

Capital Gains Tax is a tax on the profit made when you sell (or 'dispose of' ) something (an 'asset') that has increased in value. It is the gain you make that is taxed, not the amount of money you receive.


What are our top tips?


1. Keep your receipts

Keep receipts and records for all assets on which CGT might eventually be due. Failure to retain all relevant documentation will make it harder to evidence your claim for tax-allowable deduction should HMRC enquire into your calculations of tax due.


2. Annual Capital Gains exemption

Married couples or civil partners each have an individual Annual Capital Gains allowance, whereby the first £11,300 (2017/18) of taxable gain is tax free.

By transferring an asset into joint names (with a spouse or civil partner), you can make use of two tax-free allowances, so that up to £23,400 (£22,600 2017/18) of any chargeable gain can be tax free.


Note: A transfer to your spouse or civil partner must be a genuine outright gift.


3. Chattels (Personal property)

Paintings, antiques and other collectibles can be a tax-efficient investment, especially where they are not treated as a set and so can be sold piece-by-piece, with each item qualifying for a £6,000 chattel's exemption.


4. Claim Private Residence Relief to pay less

If you have lived for a time in a property as your main home before letting it out, you can potentially reduce the CGT bill when you eventually come to sell it.


5. Unmarried partners nominate to double-up on relief

Unmarried partners can each nominate a different home as their main home to get tax relief on both. Married couples and civil partners must choose one, however.


Capital Gains Tax is a complex area of taxation. For more information regarding any of our tips, and for other ways to mitigate your tax liability, contact us before making any decision.

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