Are you disposing a valuable asset?

Find out how to plan effectively for Capital Gains Tax 
If you choose to dispose of anything that might be considered an ‘appreciating asset’ – such as commercial premises or a buy-to-let property – then you need to be aware of the complex rules governing Capital Gains Tax (CGT).
CGT is paid on any gain made when a ‘chargeable asset’ is sold, gifted or ‘disposed of’. Depending on the asset this can potentially lead to significant tax bill.
Typically, an individual will incur CGT when disposing of:

  • Any property that is not their main residence.
  • Shares that are not considered to be an ISA or PEP.
  • Most personal possessions worth £6,000 or more (but not motor vehicles or assets with a lifespan of less than 50 years).

In most cases, a taxpayer will not incur CGT when disposing of their main residential property, due to a tax allowance known as private residence relief.
However, properties that have been previously let out or used for business purposes may still be liable for CGT.
Large homes that cover more than 5,000 square metres (one acre) in total may also not be eligible for private residence relief, so it is worth seeking professional advice when disposing of property.
When it comes to businesses, owners will often incur CGT on the disposal of business assets such as:

  • Land and buildings.
  • Plant and machinery.
  • Shares.
  • Fixtures and fittings.
  • Registered trade marks.
  • Your business’ reputation.

Individuals and business owners therefore need to think very carefully when they are considering disposing of any assets and seek specialist tax advice in order to determine whether a disposal will qualify for CGT – and if CGT liability can be mitigated in any way.
Individuals should note that they will usually only need to pay CGT on gains above their Annual Exempt Amount or tax-free allowance for the year. Currently, this is set at £11,700 – or £5,850 for trusts.
Similarly, business owners should be aware that they will not need to pay any tax on assets that are ‘gifted’ to a spouse or a civil partner.
Some business owners may also benefit from Entrepreneur’s Relief – a tax relief which enables sole traders, business partners or those who hold shares in a ‘personal company’ to pay just 10 per cent CGT on qualifying profits if they sell all or part of their business.
If you are considering a disposal and are concerned about the CGT implications of that disposal, get in touch with our expert team today. Grunberg & Co can provide specialist tax advice tailored to suit your unique circumstances.

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