Capital Gains Tax may be levied whenever you dispose of an asset that has increased in value since you acquired it, giving you a capital gain. Any capital gains you have made from assets during the financial year are added to your income tax and treated as the top slice of the sum for taxation purposes. Calculating which assets are liable for the tax and for what rate can be quite complex but fortunately there are many forms of Capital Gains Tax relief available:
- There is an annual exemption amount that exempts the first £9,200 of capital gains from tax.
- Private residence relief provides Capital Gains Tax relief on your main home, making it unlikely you will have to pay tax on any capital gains accrued when selling it.
- Taper relief reduces the amount of tax that you are liable to pay on an asset based on the period of time that you have held it and whether it is a business or non-business asset.
- The disposal of chattels of less than 50 years predictable life is exempt, as is the disposal of other chattels that are of value £6,000 or less.
- Reinvestment relief allows for the deferring of a gain that is reinvested into certain kinds of shares.
- Rollover relief may apply when a business asset is disposed of and the revenue used to acquire another business asset.
These are just a few of the exemptions and Capital Gains Tax relief methods available. For more information, check out our online Fair Investment Tax Bookshop and see if any of the software and guides there can help you out with handling your Capital Gains Tax relief.