Capital gains tax accountants like CMG ACCOUNTANTS are invaluable. We have the knowledge and expertise to help you work out your chargeable gain, we’ll also make sure that any capital gains tax bill is paid quickly so as not to lead to costly penalties.
There are two main types of capital gains tax: CGT and Capital Allowances. A capital gains tax is paid when you sell an asset at a profit and you can also pay capital gains tax if you buy an asset at a loss. In this case, the loss is deducted from the gain when you sell it later.
Capital gains taxation could result in higher taxes or penalties if not paid on time. In the worst-case scenario, these costs will increase due date fees, so make sure this doesn’t happen. You may also end up paying too much.
Important things to remember concerning capital gains tax
- TAX ON THE GAIN
Capital Gains Tax is an important consideration for anyone who sells their home. It can be tricky to understand, but it’s based on whether your sale price was higher than what you originally bought the house for. However, less any costs incurred during purchase like mortgage interest rates and closing fees/interest income from mortgages paid off over time. The annual exemption allowance also comes into play when calculating how much taxes are reduced through this framework.
- 30 DAY TAX FILING: You must file and pay your Capital Gains Tax within 30 days of the sale or transfer; otherwise, HMRC will charge interest on any unpaid taxes.
- SELF ASSESSMENT ADJUSTMENT: To ensure you’re on the right track, it is important that your taxes are filed and accurate. If there were any issues with paying tax or receiving credits, this could result in an adjustment for Capital Gains Tax owed at year’s end – so double-check everything.
Capital gains annual allowance
You may be surprised to learn that even if you’re self-employed, there is still a limit on how much of your profit can stay tax-free. For example, in 2021/22 it’s £12300, which will increase annually until 2022 when this figure jumps up again.
The most common assets that may incur capital gains tax
Capital gains tax are chargeable assets, including property and possessions.
- Personal property exceeding £6,000 (exempting automobiles), e.g. A valuable collection, jewellery, or art.
- You can’t live in residential property, such as a second home, holiday home, or property to rent. If you’re a UK resident, this includes overseas properties.
- Your home can be used as a business location. However, it must not exceed 5,000 square meters.
- Shares but not in an ISA/PEP
- All business assets such as material, stock, and office equipment.
Capital gains tax advice
The capital gains tax is a major factor in calculating capital gain for those who sell an asset with appreciated value over time – as opposed to sudden spikes or drops in market price, which may have been due to more so-called “good investments” going wrong than anything else. It’s important not just landlords, but any person thinking about making money off properties understand how these laws work because ignorance isn’t blissful protection anymore.
- ALLOWABLE DEDUCTIONS: One of the main benefits of selling an asset is that you can deduct any costs related to buying and selling it. This includes advertising or solicitors’ fees and significant improvements made on your behalf, which contributed towards capital growth for this item in question, so long as they are relevant.
- SMALL BUSINESS TAX RELIEFS: If you are a small business owner, there’s no need to suffer from the high cost of capital gains tax. You may be eligible for relief that could reduce or delay your bill.
Capital gains tax accountants for overseas properties
If you are a UK resident and taxpayer selling overseas property (such as holiday home or rental), then it’s time to file your annual self-assessment tax return. Standard capital gains tax rules apply when dealing with transactions like these, so make sure that all information has been recorded correctly for the sale of an asset.
Captain gains tax – non-UK residents
The tax code will determine whether you’re liable for capital gains tax on the sale of the overseas property if a UK resident. Two exceptions apply when temporary non-residence results in different rules applying. One is that it applies to individuals who have spent at least part of their life outside of the UK before returning there permanently or temporarily but not having remained out continuously over periods such as five consecutive years.
