Capital Gains Tax

In 1965 Capital Gains Tax was introduced and the legislation has been changed many times since then. It is payable on most types of profits some of the more common examples are sale of shares and disposal of property. Including investment or second property.

There are many ways to reduce the tax including use of the Annual Exemption and Special Reliefs such as the one that exempts tax on the sale of your home.

Furthermore if at anytime you have lived in the property before and/or after you rented it out this can reduce your Capital gains Tax bill.

One of the ways you can legally avoid UK capital gains tax is by your being non-resident at the time of the sale. The bad news is that you have to be non-resident for a minimum of 5 years otherwise the Inland Revenue will look to you for the tax when you become resident again. Don’t forget that you could end up paying more tax in the new country of residency than the capital gains tax. You should check this out before you become non-resident.

How we can help

The taxable gain on sale may well be severely reduced by the use of reliefs and allowances and if you have not signed contracts it may be possible to reduce your tax bill even further.

Since 1994 we have been providing such advice and you should contact us at the earliest opportunity. We can help your reduce your tax bill efficiently.

In instance one client recently sold an investment property for £280,000 this was held in joint names, it was purchased many years earlier for £49,950. After reliefs and allowances the total capital tax payable was just under £2,600, where as is the gain had been fully taxed, the tax payable would have been between £88,860 and £148,873.

Further Reading on Capital Gains Tax

  1. Capital Gains Tax, by Inland Revenue
    http://www.hmrc.gov.uk/cgt/
  2. Money, tax and benefits, by Government Direct
    http://www.direct.gov.uk/MoneyTaxAndBenefits/Taxes/BeginnersGuideToTax
  3. Understand tax on overseas properties, by Interactive Investor
    http://personalfinance.iii.co.uk/
  4. Interactive investor, by Carl Bayley
    http://personalfinance.iii.co.uk/tax/howto_display.jsp?howto_id=2268
  5. How to Avoid Property Taxes, by Carl Bayley
  6. Property Tax Secrets, by Amer Siddiq