Since 6 April 2016, higher rate capital gains have been charged at 20 per cent, down from 28 per cent and basic rate gains have a 10 per cent levy, down from 18 per cent.

Capital Gains Tax is applied on the profit you make when an asset you sell increases in value. For example, let’s say you buy an antique for £7,500 and sell it for £12,000. The gain here and what you will be charged tax upon, is £4,500.

Chargeable assets that are eligible for Capital Gains Tax include:

  • Most personal possessions worth £6,000 or more, excluding your car
  • Property that isn’t your main residence
  • Property that is your main home but is let-out or used for business
  • Shares
  • Company assets

Anyone, whether it’s a business owner or employee, that looks to make gains from asset sales must understand the implications and put effective tax planning strategies in place to minimise their overall tax bill.

Every individual receives a tax-free allowance of £11,100 meaning charges only apply on total gains above this annual exemption.

A number of reliefs are available to lower your Capital Gains Tax liability:

  • Private Residence Relief – This applies to the sale of a person’s only or main residence, yet various criteria applies
  • Entrepreneurs’ Relief – Business owners selling part or all of their business can utilise this tax break to reduce capital gains liability to 10 per cent on qualifying assets
  • Gift Hold-Over Relief – This applies when gifting business assets to a spouse, child or charity, or when selling for less than an asset is worth to assist the buyer

For more information on how the new rates of Capital Gains Tax may affect you and how to reduce your liability, contact David Herd on 0161 703 2500.