Capital Gains Tax (CGT) is a levy on the profit when you sell or dispose of an asset that has increased in value. As we navigate through 2023, here are some key points to consider:
- Annual Exempt Amount: Every individual has an annual exempt amount. For the 2022/2023 tax year, this stands at £12,300. Gains up to this amount in a single tax year are free from CGT.
- Rates: The CGT rate you pay depends on your taxable income and the type of asset. Basic rate taxpayers typically pay 10% on assets and 18% on property, while higher and additional rate taxpayers pay 20% on assets and 28% on property.
- Reliefs: Various reliefs might reduce your CGT bill, such as Entrepreneurs’ Relief or Private Residence Relief. Ensure you’re aware of these and claim them if eligible.
- Offsetting Losses: If you’ve sold assets at a loss, you can offset these against gains, effectively reducing your taxable profit.
- Keep Records: HMRC requires you to keep records of all disposals and acquisitions of assets. This is crucial for accurately calculating your gains or losses.
In Conclusion: Navigating CGT requires an understanding of the nuances and potential reliefs available. Proper planning can significantly reduce your tax liability.
