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Avoiding Capital Gains Tax

When it comes to avoiding Capital Gains Tax, there are many conditions and regulations that need to be kept in mind.  Capital Gains Tax can be largely avoidable on many kinds of capital gains, and while the core method by which the tax is calculated is relatively simple, the raft of different exemptions and laws involved can make it significantly more complex.

The tax is levied upon the disposal of a capital asset, and is based on the increase in value of the asset since the time it was acquired.  Capital gains for the year are added to your taxable income and then taxed as if the top portion of the resulting sum.  If you are interested in avoiding Capital Gains Tax, then consider the following exemptions to help reduce your tax bill:

  • The first £9,200 of capital gains each year falls under the Annual Exempt Amount and is free from tax.
  • Your main residence may qualify for private residence relief, which exempts it from the tax.
  • Chattels of a predictable life of less than 50 years, along with chattels worth £6,000 or less, are exempt.
  • ISAs are exempt.
  • Taper relief reduces the payable tax on an asset’s gains based on the period of time that you have held the asset for.

These are just some of the many exemptions and conditions that can apply to Capital Gains Tax.  For more information and advice on avoiding Capital Gains Tax, check out the links below, or take a look at our Fair Investment Tax Bookshop for helpful calculators and guides to navigating the tax maze.

Disclaimer: Every effort is made to keep the site accurate, however please bear in mind that tax rates are subject to change. If you require tax advice you should speak to a professional tax adviser.