Elysium Law

CGT

CAPITAL GAINS TAX

 

Selling something at a profit will usually trigger Capital Gains Tax

We provide Capital Gains Tax advice and guidance on liability, the relevant rates and eligibility for relief through allowances and exemptions.

We will identify triggers to a Capital Gains Tax (“CGT”) liability, such as selling shares , and advise on the most tax-efficient arrangement for your circumstances.

As well as your CGT annual exemption, we will explore additional reliefs that may be open to you, such as Entrepreneurs’ Relief.

We have experience of providing Capital Gains Tax advice to buy-to-let landlords or property owners of second homes, who may be hit hard by CGT on any property sales. 

CGT rates on property

In the UK, you pay higher rates of CGT on property than other assets.

Basic-rate taxpayers pay 18% on gains they make when selling property, while higher and additional-rate taxpayers pay 28%.

With other assets, the basic-rate of CGT is 10%, and the higher-rate is 20%. 

Bear in mind that any capital gains will be included when working out your tax status for the year, and may push you into a higher bracket.

All taxpayers have an annual CGT allowance, meaning they can earn a certain amount tax-free. 

If you have a buy-to let portfolio, we can advise upon legitimate strategies to deal with CGT upon sales of properties.

 
images (1).jpg

Do I pay capital gains tax on a business sale?

If you’re selling a business, there are extra reliefs available which might mean you can pay less capital gains tax (CGT) when you sell or give away your company.

Entrepreneurs' relief means you may pay a lower CGT rate, charged at 10% on the first £10m of gains, when selling a qualifying business.

It can be worth a small fortune, potentially saving £1 million in tax.

CGT is often tied up with inheritance tax planning as both often relate to the most valuable assets in your estate and as such the impact of one can be substantial on the other and it’s vital to ensure that both aspects are considered. 

Who can claim entrepreneurs' relief? 

You can claim entrepreneurs relief if;

  • you are a sole trader or partner selling part or all of your business or its assets, or

  • you control at least 5% of the company's net assets of which you are selling and are entitled to 5% of its distributable profits

  • you sell assets from the above businesses within three years of closing down.

Entrepreneurs' relief doesn’t apply to property portfolios held within a company structure. So, for example, if you’re a portfolio landlord you couldn’t claim.