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Capital gains tax is levied when you sell or give away an asset that has increased in value. You may be taxable on any “gain” or profit above an annual exempt amount, which stands at £10,100 in the 2009-10 financial year

Major changes to the capital gains tax regime, which took effect from 6 April 2008, introduced a flat rate of taxation of 18 per cent on capital gains.

Key exemptions include the transfer of assets between married couples and civil partners and the profit on the sale of your home, or principal residence. Others include gifts to charities, privately-owned cars and personal belongings where the sale proceeds are less than £6,000.

But if you are considering the sale of a business, a second home, shares or other property, such as antiques or jewellery, which has gained in value, seeking the advice of our expert tax team is a wise step to help you achieve maximum capital gains tax efficiency.

For example, someone disposing of a business is eligible for “entrepreneur’s relief”, effectively reducing the rate to ten per cent on gains of up to £1 million, accumulated during their lifetime. The relief also applies to gains on disposals of certain shares and assets associated with a qualifying company.

However, a buy-to-let property is not classed as a business asset, even though it may generate income for the owner, so it is liable for capital gains tax at the new standard rate of 18 per cent.

Other complexities include deductions of the cost of improving or adding to your asset – such as extending a house, rather than repairing it – and the costs of buying and selling, such as legal expenses and estate agents fees’ fees for property or a broker’s commission on shares.

If you would like more information on capital gains tax, please contact our experienced tax professionals.

If you would like to find out more, please contact us.

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