No significant changes have been made to the system of Capital Gains Tax (CGT) in 2014/15 so:
- gains (after deduction of an annual exemption) are added to income to determine the rate of CGT
- Entrepreneurs' Relief (ER) gives a 10% tax rate on the first £10 million of qualifying business gains, for each individual over their lifetime
- an 18% rate applies to other gains to the extent that they fall within the basic rate band
- a 28% rate applies to remaining gains.
Please contact us to discuss any planned business or company share disposals so that we can help to establish the correct approach to secure the availability of any ER.
The first £11,000 (£11,100) of gains are CGT free being covered by the annual exemption. Each spouse has their own annual exemption, as indeed do children. A transfer of assets between spouses may enable them to utilise their annual exemptions. Consider selling assets standing at a gain before the end of the tax year to use the annual exemption. Bed and breakfasting (sale and repurchase) of shares is no longer tax effective but there are two variants which still work:
- sale by one spouse and repurchase by the other
- sale followed by repurchase via an Individual Savings Account.
These techniques may also be used to establish a loss that can be set against any gains.
A capital loss can be claimed on an asset that is virtually worthless. Where the asset is of 'negligible value' by 5 April 2015 the capital loss can be used in 2014/15.
Moving abroad can take you outside the CGT net. However, it is clearly not a decision to be taken lightly and requires very careful planning. Please talk to us if this is an area of interest for you.
See the Investments section for more options.
No CGT planning should be undertaken in isolation. Other tax and non-tax factors may be relevant, particularly inheritance tax, in relation to capital assets.