Capital Gains Tax (CGT)

Exempt assets

Some assets such as private cars are exempt from CGT. So no CGT to pay even though selling at profit

Non-residential assets

Non-residential assets, for example commercial properties, pay CGT at 10% or 20% 

Residential assets

Residential assets, for instance, buy to let properties, pay tax at 18% or 28% 

Annual Exempt Amount (AEA)

AEA is a tax-free amount for everyone and currently is £12,300 per annum

Reliefs

If you meet certain conditions, then reliefs such as Business Asset Disposal Relief is  available to reduce your capital gains tax. 

Exempt transfers

Exempt transfer is either  transfers between spouses/civil partners or to charities or both

Capital Gains Tax (CGT)

Capital gains tax is tax on profit made from disposing of asset(s). MW Accounting Services can advise and help.

Capital Gains Tax

Capital Gains Tax is a tax on the profit you make from disposing of your asset. If you make a loss from the disposal, then you set the loss against gains from another sales. Reliefs such as Rollover Relief, Gift Relief or Business Asset Disposal Relief are available to either reduce or defer the capital gains tax if you meet certain conditions. Disposal in this context means:

  • selling
  • giving away the asset (as a gift)
  • transferring the asset to someone else
  • swapping the asset for something else
  • receiving compensation for the stolen or damaged asset

Some assets, for instance, cars, UK government securities (gilts) and wasting chattels such as racehorses and greyhounds are exempt from capital gains tax. This means you will pay no CGT even though you make profits from the sales. So if you own racehorses and then sell them even with high profit, there is no tax to pay.

MW Accounting Services provides reliable and friendly services

Capital Gains Tax payment

For individuals, the CGT for any assets other than UK residential property is included in a self assessment tax return. And so is the payment. However, from 6 April 2020, the CGT due on UK residential property must be reported and paid, using capital gains tax on UK property account, within 30 days of it being sold. Unlike income tax, there are no payments on account for CGT.

A company will, instead, include the gain (called chargeable gain) in its corporation tax computation. An indexation allowance, up to December 2017, is also available to reduce its chargeable gains and CGT to pay. The CGT liability will be part of the corporation tax payable.

CGT rates

Unless the reliefs apply, the CGT rates for individuals are normally 10% or 20% for gains on non-residential assets and 18% or 28% for residential ones

A company, however, pays its CGT at the same rate as corporation tax (currently 19%).

Annual Exemption Amount (AEA)

Each individual is entitled to an AEA, which is similar to the Personal Allowance. This means the first £12,300 of your gain will be tax free. However, if you do not use it in any tax year, you will waste/lose it as you cannot carry it forward to the following year.

In contrast, a company does not get an AEA as individuals do because it gets an indexation allowance instead.

Exempt transfers

Transfers or selling either between spouses (including civil partners) or to charities or both are CGT exempt..

Our accountants are fully qualified as well as experienced. Our friendly and reliable accounting services are flexible. If you are looking for peace of mind accounting services, then feel free to contact MW Accounting Services and we are more than happy to help.