Capital gains

Capital gains

Capital gains tax (CGT) can arise when disposing of assets such as a second home, antiques, jewellery and works of art, shares, or a business.

The first £11,300 of gains are CGT free, being covered by the annual exemption. Each spouse has their own annual exemption, as indeed do children. A transfer of assets between spouses may enable them to utilise their annual exemptions. Consider selling assets standing at a gain before the end of the tax year to use the annual exemption. Bed and breakfasting (sale and repurchase) of shares is no longer tax effective, but there are two variants which still work: sale by one spouse and a purchase by the other: sale followed by repurchase via an ISA. These techniques may also be used to establish a loss that can be set against any gains.

There are also useful reliefs that can reduce the rate of CGT paid, such as Entrepreneurs’ Relief, and its extension, Investors’ Relief.

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