Stephen J. Dann
Capital Gains Tax
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This tax is applied to the profit ("gain") you make when selling an asset. Capital Gains tax relief is also available for losses, and many items are exempt from this tax, including your home. Individuals are entitled to an annual exemption (currently £ 9,600). Gains realised prior to 6th April, 2008 also qualify for other allowances including indexation allowance which upgrades the cost of assets in line with inflation prior to 6th April, 1998, and taper relief which is available thereafter. Capital Gains Tax Indexation Tables can be viewed here. and Capital Gains tax taper relief tables can be viewed here. I strongly advise against using these tables without a thorough understanding of the associated rules which changed considerably with effect from 6th April, 2008. More information on the changes can be found in the following PDF document. Capital Gains Tax Reform 2008 The Inland Revenue do provide free Capital Gains tax advice but Officers are only trained to provide guidance in application of the legislation and are not trained to provide advice on how to minimise your liability to tax.
After all available exemptions and reliefs have been applied, the net gain is taxed at a flat 18% rate. Indexation and Taper reliefs were abolished for all gains realised after 5th April, 2008
It is frequently possible to mitigate the tax on an a second home without creating any tax liability on an individual's principal private residence by electing for the second home to be treated as though it were the principal private residence. This involves a "balancing act" between the two properties and requires annual review to ensure the election is still beneficial. I can advise on this issue and provide detailed calculations involving all available reliefs.
If you are handing a business asset to someone else then it is possible to ensure that no Capital Gains tax is payable on this transfer. The rules change from time-to-time and require detailed consideration.
Non-residents and non-domicileds also have Capital Gains tax issues which require planning,especially in determining what may be bought and sold before departure, selling assets whilst abroad, and planning disposals prior to returning to the Uk. It is important to note that where an individual remains outside the Uk for less than five complete tax years, assets owned at the time of departure and sold whilst abroad will be subject to Capital Gains tax in the year of return. For specific advice on Uk tax laws for British expats, especially non-resident landlords, please contact me via the email link below outlining your own individual situation.
Before returning to the Uk it is important to consider the value of any assets acquired whilst abroad and to consider disposing of them prior to returning (especially "bed and breakfasting") in order to avoid any future liability which may arise many years after returning.
If your tax affairs are straightforward, or you are overseas, then to contact a tax consultant you would have to approach an accountancy firm which is time-consuming and expensive. I provide reliable advice on capital gains issues online for reasonable fees. The most recent cases are listed on my "advice via internet" page. Once I have all the related information I require, I can usually provide a detailed and accurate response either from my thirty five years of professional experience, or from my extensive library within 24 hours. A fee, usually of no more than £ 125, is generally charged in most instances.