Capital Gains Tax
Capital Gains Tax is a tax you pay when you make a gain or profit on the sale or disposal of something that you own (e.g. shares or property). You are entitled to a tax-free allowance which means gains under a certain amount do not suffer tax. There are also some additional reliefs that may reduce your exposure to Capital Gains Tax. With the right advice, sometimes you may not have tax to pay Capital Gains Tax at all.
The disposal of certain assets is not subject to Capital Gains Tax, for example your personal car or, in most cases, your Principal Private Residence (your main home). You are also entitled to a tax free allowance, known as the ‘Annual Exempt Amount’. For an individual the Annual Exempt Amount for the tax year 2010-2011 is £10,100. This means you can make a gain of up to £10,100 before suffering Capital Gains Tax. Any gain over an individual’s Annual Exempt Amount is taxed at 18% or 28% (the rate used will depend on the amount of their total taxable income and gains).
Capital Gains Tax is a complex area and significant savings can be achieved through the utilisation of available reliefs and the effective planning of an estate. Professional guidance is vital, so please contact Collective Legal Solutions today to arrange a consultation with a Chartered Tax Adviser.