Capital gain tax can arise in an unexpected situation, such as a gift of an asset to your children. Without prior planning and correct advice, the first you may be aware of the missed liability is a letter from HMRC.
Capital gains tax can apply to the disposal of assets, from a single item to multiple business assets. There are numerous relief opportunities available to manage liabilities, thus maximising the money in your pocket. Broadly, any transfer of assets by an individual (or trustee) is subject to capital gains tax, unless a specific exemption applies or relief can be claimed.
Whilst many people are aware that capital gains tax is not generally payable on the sale of their home, relatively few realise this is due to a specific relief for the disposal of a main private residence. Therefore, it does not apply in all circumstances and can be restricted in some cases.
Other forms of relief are available, such as where disposal proceeds are reinvested in certain approved investments. These could include the enterprise investment scheme (EIS), seed enterprise Investment scheme (SEIS) or a venture capital trust (VCT).
Potentially the most valuable relief, with a maximum lifetime tax saving of £1m, is entrepreneurs’ relief. This can be claimed on the disposal of a business, shares in a qualifying company or business assets.
Sales of artwork, antique furnishings and other chattels can be subject to capital gains tax, whereas other assets such as cars can be exempt. Before selling anything of value, it is wise to take advice.
Charterhouse can advise you on the tax implications when a transaction is being planned. We can ensure that any necessary action can then be taken before the liability arises and that no planning opportunities are missed. We can also complete any necessary disclosure to HMRC on your tax return, as part of our annual compliance service.
Capital gains tax should be considered in conjunction with inheritance tax planning to ensure that reducing a liability with one hand doesn’t generate one with the other. Get in touch with us to discuss how we can help you minimise your liability to capital gains tax.
Charterhouse can advise you on the tax implications when a transaction is being planned. We can ensure that any necessary action can then be taken before the liability arises and that no planning opportunities are missed.