Definition: Capital Gains Tax (CGT) in the UK is a tax applied to the profit you make when you sell an asset that has increased in value. It’s the gain you make that’s taxed, not the entire amount you receive.

Strategies to Mitigate Capital Gains Tax Liabilities:

1. Hold Investments Longer: In some cases, assets held for longer periods might benefit from a reduced CGT rate, depending on various circumstances.
2. Use Your Annual Tax-Free Allowance: Everyone in the UK has an annual tax-free allowance, called the Annual Exempt Amount, which can reduce your CGT liability.
3. Transfer Assets: Transferring assets between spouses or civil partners can be done without incurring CGT, potentially allowing both parties to use their Annual Exempt Amounts.
4. Offset Losses: If you have sold assets at a loss, you might be able to offset these losses against gains to reduce the overall tax liability.
5. Make Use of Tax-Efficient Investment Schemes: Investing in schemes like the Enterprise Investment Scheme (EIS) or Seed Enterprise Investment Scheme (SEIS) can offer CGT reliefs.

Definition: Income tax in the UK is a tax levied on the income of individuals. The amount of tax you pay depends on your income and how much of it falls within each tax band.

Strategies to Reduce Income Tax Liabilities:

1. Utilise Your Personal Allowance: Ensure you’re making full use of your personal allowance, the amount you can earn tax-free each year.
2. Maximise ISA Contributions: Individual Savings Accounts (ISAs) allow for tax-free savings and investments up to a certain limit each year.
3. Income Splitting: Transfer income-producing assets to a spouse or civil partner who is in a lower tax bracket to reduce the overall tax liability.
4. Contribute to Pension Schemes: Contributions to pension schemes can provide tax relief, reducing your taxable income.
5. Claim All Deductions: Ensure you’re claiming all available tax deductions, such as charitable donations made through Gift Aid.

Definition: Inheritance Tax in the UK is a tax on the estate (money, property, and possessions) of someone who has died.

Strategies to Reduce Potential Inheritance Tax:

1. Gifting: You can gift money or assets during your lifetime, which can potentially reduce the value of your estate and its subsequent tax. Make sure to understand the “seven-year rule” for gifts.
2. Establish Trusts: Trusts can help manage and distribute assets to beneficiaries, potentially in a tax-efficient manner.
3. Take Out Life Insurance: A life insurance policy can cover the cost of the Inheritance Tax bill, ensuring that your beneficiaries receive the full value of your estate.
4. Main Residence Relief: If you leave your home to your children or grandchildren, the threshold can increase, reducing the inheritance tax liability.
5. Business Relief: Some business assets might be exempt from Inheritance Tax or get a reduced rate.