Capital Gains Tax Advice 2018
(tax year 06/04/2018 to 05/04/2019)
Capital gains tax (CGT) is a tax on profits or capital gains that you make when you sell or give away certain capital assets that you own.
What is taxed? - The sale price or value on the date you give away an asset less your yearly tax free allowance, less the purchase price is the taxable gain.
How much tax do I pay? There have been significant changes to Capital Gains Tax and taper relief, including the removal of taper relief for Individuals, Trusts and Business Assets in 2008 and the reduction of the real rate of tax (non property investments in 2017).
Annual Exemption for Individuals £11700
Rates of Capital Gains Tax CGT: Individuals - Chargeable gains are added to your taxable income.
Rates of Capital Gains Tax CGT: Individuals on Investment/Residential Property - Chargeable gains are added to your taxable income.
Annual Exemption for Trusts - £5850
This means a trust can realise adjusted gains each year to the value of the allowance with no liability to taxes. Normally the allowance is for all trusts created by the same person i.e. there is only one allowance for all trusts. The rate of tax charged on a trust is 28%.
Annual Exemption for LPRs (Legal Personal Representives) - £11700
Annual Exemption - Businesses
Nil - there is no annual exemption, all gains are deemed as trading receipts and taxable at normal business or corporation tax rates.
Entrepreneurs Relief Rate for Business Assets.
CGT rate of 10.00 % of the chargeable gain is charged as a concession on the sale of trading businesses and shares with a cumulative lifetime allowance for the individual as follows:
Withdrawal of Tiered Rates and Taper Relief Before 5 April 2008:
2. Pay Capital Gains Tax
Capital gains tax (CGT) liabilities to tax are reported and paid as part of your self-assessment tax return.
There are special pages in the tax return to detail your gains and any taxes due.
The tax year ends on the 5 April and the tax is due to be settled on the following 31 January
3. Capital Gains Tax Calculation
Calculation of Capital Gains Tax CGT - How Capital Gains Tax is Calculated:
Firstly, you need to work out the gain or profit. This is done by deducting from the sale price or valuation on the date a gift is made, things like the original purchase price, including legal fees, any money spent on improvements and costs for selling or gifting the property.
Calculation of the gain - Rules after 6 April 2008
Old Rules: Calculation of the gains realised and made before 6 April 2008