How to save money on Capital Gains Tax
How do you save money on Capital Gains Tax? For an Accountant this is a question which is asked regularly. But as you can always find a way to save money. Below I give you a basic insight into how CGT (Capital Gains Tax) works, some tips, exceptions and how to avoid it completely:
How does it work?
CGT is run through the tax year (6th April one year to 5th of April the following year). It is worked out on the total of your taxable profit from any capital assets that you hold. For instance, property, bonds and shares on the stock exchange. Furthermore, it is when the amount exceeds the purchase price of a property, bond and shares/stock. The amount that is exempt (tax free) annually is £10,900 for 2013 to 2014 (which increases to £11,000 for 2014 to 2015). At present there are two different types of CGT. The basic rate taxpayers pay is 18%, although the higher rate tax payers pay is 28% and if the capital gains goes over your threshold you will pay the higher tax.
Tips to save money
Below are some tips to keep the CGT Low as possible:
Any profit made on selling your home is tax exempt, unless you did one of the options below:
You can also get away with not paying tax if you make a profit on selling a car, ISA’s, Peps, UK government gifts, savings certificate, premium bonds, personal belongings that are worth £6,000 or less when you come around to selling them. Furthermore there is a 10% tax rate with the entrepreneur’s allowance, which is aimed to help people that are selling their businesses they have built up. It has a lifetime limit of £5m.
Avoid it completely
If you want to avoid paying the higher threshold of 28% there are some suggestions below:
You can defer your CGT by reinvesting it into the Enterprise Investment Scheme (EIS). You would have a limit of £200,000. Furthermore, any profit made will be exempt if you meet the qualifying standards.
Finally, while tax avoidance is legal, tax evasion is illegal. So do not be tempted to sell assets without declaring any profit to HMRC. Defrauding the tax man can land you with a large fine or even a prison sentence.
But the advice and support of an experienced tax accountant and some sound forward tax planning can save you thousands of pounds.
By Tahir Malik at Tax Affinity Accountants
Tax Affinity Accountants are experts in Tax and Accountancy. Based in Kingston upon Thames they are considered in the Finance Industry to be the experts in all types of Tax including Capital Gains Tax. Helping and supporting businesses and individuals throughout the UK, they regularly help people with their CGT tax issues.
For more information visit www.taxaffinity.com. To read more interesting articles like this visit www.taxaffinity.com/blog. Please feel free to comment and share this with your friends.
6/10/2014 08:48:16 am
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