March 23, 2010

Capital Gains Tax

Along with inheritance tax, capital gains tax is often referred to as a voluntary tax. With careful prior tax planning, it is often possible to reduce or totally avoid capital gains tax. Depending upon your circumstances, we may be able to reduce or delay the payment of your capital gains tax liability:

Reducing the amount of capital gains tax assessable

  • Maximising your claim for all valid tax deductions:
    • Professional fees,
    • Enhancement expenditure,
  • Claiming all eligible reliefs:
    • Entrepreneurs Relief (for disposals since 5 April 2008),
    • Taper Relief (for disposals before 6 April 2008),
    • Principal Private Residence Relief,
    • Lettings Relief,
    • Gift Relief,
    • Set-off against current year or brought forward capital losses.
  • Making use of all available exemptions:
    • Chattel Exemption
    • Annual Exemption
  • Reviewing whether any elections could benefit you, such as nominating your principal private residence, if you own and occupy more than one house,
  • Crystallising the “paper loss” on equity investments. This may be possible by submitting a negligible value claim rather than by through an actual sale,
  • Considering emigrating overseas and becoming non-domiciled, for UK capital gains tax purposes,
  • Examining whether trusts or pension funds could be used as a capital gains tax planning device,
  • Considering changing the ownership of the asset, particularly if your spouse has unused annual exemptions or current year or brought forward capital losses,
  • Restructuring the asset held. This can be particularly useful within areas of corporate finance, where equities can be exchanged for loan notes, which can be redeemed over a number of years, taking advantage of more than one year’s worth of annual exemption.

Delaying when the capital gains tax is payable

  • Influencing the timing of the sale, including considering whether the disposal can be spread over more than one tax year, to maximise available reliefs and exemptions,
  • Delaying payment of tax on the assessable capital gain by reinvesting the proceeds and claiming:
    • Roll-over relief,
    • Holdover relief,
    • Deferral Relief.

The most popular capital gains tax service we offer is calculating your current exposure to this tax, then discussing your options for restructuring your affairs to reduce this tax.

Agreeing your capital gains tax liability with HM Revenue & Customs is achieved by completing the capital gains supplementary pages of a normal personal tax return. Clients who are fearful that this gain may be investigated by “the Revenue” may wish to consider taking out our fee protection insurance.

Seek our advice in structuring your financial affairs and rest assured that you will not be paying any more capital gains tax than you absolutely have to. In addition, we shall complete all of the necessary paperwork for you and communicate with “the Revenue”, to agree the liability, on your behalf.