Capital Gains Tax, CGT, becomes liable on disposal of an asset. This can be in the form of a sale, loss or damage or gifting of an asset. Asset can be in the form of shares, property, art works or intellectual rights.
In each tax year, CGT is charged on the net total of your gains after deduction of allowable losses in the same year or brought forward from earlier tax years.
Costs that are allowable in calculating capital gains include:
- Acquisition cost/market value on 31 March 1982 (if asset came into acquisition before that date)
- The incidental costs of acquiring and disposing of the asset
- Cost incurred on enhancing the asset’s value
- Indexation allowance (only available up until April 1998)
- Taper Relief and Entrepreneurs’ Relief
The gains are charged at set rates of tax with an annual exemption for taxpayers so that a certain amount of net gains are completely free of CGT.
Reliefs and exemptions available are as follows:
- CGT does not apply to an individuals’ only or man residence
- Shares held in an individual Savings account
- In case of business assets, capital gains can be deferred by claiming rollover relief where the proceeds are being reinvested in other business assets
- Enterprise Investment Scheme and Venture Capital trust investments also offer ways to defer CGT but are subject to certain rules
Feel free to get in touch with us if you wish to dispose of an asset, to explore possible options available.
