Capital Gains Tax
What is Capital Gains Tax (CGT)?
Capital Gains Tax is a tax levied on the profit made from the sale of a capital asset such as property, shares, or other investments. The amount of tax you pay is calculated on the profit you make on the sale of the asset, rather than the total amount received from the sale.
CGT is due in respect of gains made not only from disposing of assets but can also arise from transferring or gifting of assets.
The tax rate can vary depending on the type of asset, how long you have owned it, and your income tax bracket. For example, if you’ve sold residential property, the rate of tax will be different than if you’ve sold shares, personal possessions, or business assets.
It is important to keep accurate records of the purchase and sale of any assets to ensure you pay the correct amount of tax.
In the UK, there is an annual Capital Gains Tax allowance, which means you can make a certain amount of profit each year before you are required to pay the tax.
Is an accountant necessary to help with Capital Gains Tax calculations?
We often get asked this question. The answer is that CGT can be a complicated area of taxation and we can provide guidance on the best way to structure your affairs to minimise your CGT liability.
It can also be important to plan in advance and take advice prior to any such transactions to ensure that available reliefs and exemptions are claimed.
We can also help you understand your options for deferring or mitigating your CGT liability.
Please also be aware that with regard to residential properties, you have just 60 days from the completion of the sale to pay your CGT. Failure to pay within the 60-day window can result in penalties or interest being added to the amount owed.
In conclusion, understanding CGT and the various ways to offset the tax is complex, and seeking the help of a specialist can be a wise investment.
We offer Capital Gains Tax advice to businesses and individuals.
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