{"id":3461,"date":"2018-08-03T09:57:36","date_gmt":"2018-08-03T09:57:36","guid":{"rendered":"http:\/\/my-brains.co.uk\/jackross\/?p=3461"},"modified":"2018-08-03T09:57:36","modified_gmt":"2018-08-03T09:57:36","slug":"capital-gains-tax-planning-3","status":"publish","type":"post","link":"http:\/\/my-brains.co.uk\/jackross\/capital-gains-tax-planning-3\/","title":{"rendered":"Capital gains tax planning"},"content":{"rendered":"

How can you reduce your capital gains tax bill in 2018\/19?<\/span><\/h2>\n

Whether you\u2019re a buy-to-let landlord, a shareholder, an art dealer or you fall somewhere in between, the chances are you will be familiar with paying capital gains tax (CGT).<\/p>\n

CGT is payable when you \u2018dispose\u2019 of a certain item and make money from the sale, with the amount you\u2019re liable for depending on your income and the asset in question.<\/p>\n

These could be personal items worth more than \u00a36,000, a second home or even shares you own in a limited company.<\/p>\n

CGT is due when you sell or give these assets away, classed as \u2018disposing\u2019 of an asset in the eyes of HMRC.<\/p>\n

For example, you buy a house for \u00a3170,000 with the intention of letting it out to tenants and manage to sell it for \u00a3210,000 three years later.<\/p>\n

This will leave you with \u00a340,000 of profit before deducting the annual exemption, which is potentially liable for CGT.<\/p>\n

However, it\u2019s possible to reduce your tax bill through careful CGT planning and there are several reliefs out there to help you and your business form a tax-efficient strategy in 2018\/19.<\/p>\n

Rates<\/span><\/h3>\n

Everybody in the UK sits in a specific income tax band depending on how much they earn in the tax year and it\u2019s these bands that determine how much CGT they pay.<\/p>\n

You will pay 10% CGT if you\u2019re a basic rate taxpayer earning up to \u00a346,350 in 2018\/19.<\/p>\n

This rate of CGT doubles to 20% for higher rate taxpayers, who earn between \u00a346,351 and \u00a3150,000.<\/p>\n

A surcharge of 8% applies to gains relating to the sale of residential properties that are not your main home, which benefits from a private residence relief that usually exempts it from CGT.<\/p>\n

In Scotland, the CGT rates are the same as the rates and thresholds elsewhere in the UK, despite five income tax bands being in place for 2018\/19.<\/p>\n

Personal<\/span><\/h2>\n

Tax-free amounts<\/span><\/h3>\n

Every taxpayer in the UK is entitled to take advantage of an \u00a311,700 annual CGT exemption, which means you won\u2019t pay any tax on gains worth less than this amount in 2018\/19.<\/p>\n

Your taxable gains are calculated after deducting your annual CGT exemption and any capital losses.<\/p>\n

This differs from your tax-free personal allowance of \u00a311,850, which is used to calculate your taxable income if you earn less than \u00a3123,700 in 2018\/19.<\/p>\n

If you don\u2019t use all of your personal allowance or annual exemption in 2018\/19, you won\u2019t be able to carry the unused amount into another tax year or transfer it to another person.<\/p>\n

Tax-free assets<\/span><\/h3>\n

The following types of assets are not subject to CGT when you dispose of them:<\/p>\n