Planning to minimise Capital Gains
Unfortunately we often see expensive mistakes regarding capital gains tax (CGT) in terms of timing of disposals, a very simple trick if you’re planning a disposal of properties or shares etc and you’re likely to have capital gains to pay is to plan the disposals around the end of the tax year.
Each person has an annual exempt amount (2020/2021 is £12,300) so you only pay capital gains tax on profits you make above this amount. For example If you plan to sell two properties, by selling one before 5th April and one after 6th April you can utilise two allowances so £24,600 profit before you pay any tax.
Owning properties and investments jointly is also tax efficient and husbands, wives and civil partners can transfer assets between themselves at no gain, no loss. By structuring investments between spouses or civil partners you make use of an individuals annual exempt amount on sale and also potentially save tax where one spouse or civil partner pays tax at a lower rate we would recommend doing this well before a sale is planned otherwise it may come under scrutiny from HMRC.
It’s worth noting the chancellor is reviewing Capital Gains tax possibly to raise tax to cover extra spending during the coronavirus pandemic. At the time of writing we don’t know if the annual exempt amount will be affected but it’s worth bearing in mind if you’re looking to sell in the near future as it could be.