Capital Gains Tax (CGT) is something that many people think does not apply to them but you might be surprised! It is a tax on the profit when you sell or give away something that has gone up in value.
It’s the actual gain you make that’s taxed, not the amount of money you receive. So, for example, if you bought a piece of art for £3,000 and sold it later for £16,000 you made a “gain” of £13,000 and it is the £13,000 which would be taxed.
We can advise you on the CGT implications of selling any assets such as property or company shares and let you know about any tax reliefs which may be available.
Some assets are tax-free such as ISAs, Premium Bonds and lottery winnings and if you sell your family home you won’t have to pay CGT unless you have used part of the home purely for business or it is a property on more than an acre of land.
You may well have to pay CGT if you sell buy-to-let properties, land or any inherited property and this is when you need to take proper advice. If you let out a property which used to be your home you do get some Private Residence Relief – how much will depend on how long you lived there compared to how long the property has been rented out.
If you want to sell any business assets such as buildings, fixtures and fittings, machinery, shares or your trademark you may very well need to pay CGT if you are a sole trader or in a partnership. If you are a limited company you would need to pay Corporation Tax instead.
Our best advice would be – don’t give yourself a headache trying to work out how much you might owe – just give us a call and we will make sure you pay the correct amount and benefit from any relief you are entitled to.