In 2020/21 receipts from Capital Gains Tax in the United Kingdom amounted to approximately £10.61 billion, an increase of approximately £800 million when compared with the previous year.
With the amount of tax collected increasing, if you have made a capital gain in Bury St Edmunds/ Thetford or elsewhere you should seek advice to reduce the impact of any liabilities you incur following a disposal that generates a significant gain.
Capital Gains Tax is a tax on the profit when you sell (or ‘dispose of’) something (an ‘asset’) that’s increased in value. It’s only the gain you make that’s taxed, not the amount of money you receive.
You do not have to pay Capital Gains Tax if all your gains in a year are under your tax-free allowance of £12,300. Beyond that disposals are taxed by adding your total taxable gains to your total taxable income.
If this amount is within the basic Income Tax band, you’ll pay 10 per cent on your gains or 18 per cent on residential property.
If it is above the basic tax rate you will pay Capital Gains Tax at a rate of 20 per cent or 28 per cent if the gain relates to a property.
Certain assets, such as cars or your main home in Bury St Edmunds/ Thetford
in which you reside, are exempt from Capital Gains Tax so it is best to seek advice from our team in Bury St Edmunds, Ipswich and Thetford.
How and when you report Capital Gains Tax depends on what assets you made the gain on.
Since 6 April 2020, there are different ways to report and pay Capital Gains Tax due on UK residential property compared to other gains.
You must report and pay any tax due on UK residential property using a Capital Gains Tax on UK property account within 30 days of selling it.
If your gain is not from residential property sold in the UK since 6 April 2020, you have a choice of how and when to report the tax, either by using the ‘real-time’ Capital Gains Tax service or via a self-assessment tax return in the following tax year.
Regardless of when you report your Capital Gain, taxpayers in Bury St Edmunds/ Thetford will need to let HMRC know:
There are many tax reliefs available to taxpayers in Bury St Edmunds/ Thetford depending on the type of asset that has generated a gain and how it is disposed of.
This includes Business Asset Disposal Relief, formerly known as Entrepreneur’s Relief, which could reduce the amount of Capital Gains Tax you pay to just 10 per cent when selling a business or a significant shareholding
There are also other tax planning steps that a person can take throughout their lives to reduce their Capital Gains liabilities, including how they structure their estate.
If you are faced with a considerable Capital Gains Tax bill or you are concerned that your disposal of assets could lead to additional liabilities, please speak to our experienced tax team today.To find out how we can help, please contact us