Individuals may be required to pay capital gains tax if they dispose of a capital asset at a profit which is above the annual exemption limit for the tax year. The purchase price and the costs related to buying and selling the asset are usually deductible when calculating the gain.
Individual taxpayers are entitled to an annual allowance each year and any gains more than this allowance are taxable at capital gains tax rates applicable to the individuals.
The disposal of following most commonly disposed assets may be subject to capital gains tax such as:
- Disposal of residential or commercial property
- Disposal of shares in a personal trading company
- Disposal of stocks or bonds
- Sales or grant of leases
- Any other capital asset
There are many tax reliefs available on the disposal of assets such as:
- Principal private residence relief (PPR)
- Letting relief
- Entrepreneurs’ relief
- Rollover relief and deferral relief
- Gift relief
- EIS and SEIS reinvestment relief etc
- Set-off against current year or brought forward losses
The above reliefs can result in a significant tax savings. We would therefore strongly advise you to contact our team at Martax for timely and tax saving advice.