Capital Gains Tax
It seems no government can resist making changes to capital gains tax. We’ve lost count of the number of changes made in the last ten years alone. But it is still possible to make savings by careful planning.
Capital gains on assets other than residential property are taxed at 10% for basic rate taxpayers and 20% for higher and additional rate taxpayers. For residential property, such as buy-to-let investments, the rates are 18% for basic rate taxpayers and 28% for higher and additional rate taxpayers. These rates of tax are payable once gains exceed the annual exempt amount of £11,100. Investments within ISAs are not liable to CGT, so make sure that you use your ISA allowance every year.
Most people know that they can save up to £3,108 tax by gifting a share in a property to a spouse or civil partner before sale. But did you know that, if you rent out your previous home when you move to a new home, you can get additional tax relief that could save you up to £11,200 - and double that for a couple?
One client asked us to help when HMRC investigated the sale of a flat. In the course of reviewing her affairs, we discovered unclaimed capital losses of over £300,000. After setting off the gain on the flat, she still has £250,000 losses to carry forward indefinitely until she sells the next investment property.