Capital Gains & Inheritance Tax
The key to capital gains and inheritance tax accounting lies in knowing and understanding all the details. This allows you to put in place a plan to balance taxes and reliefs.
Our team of highly experienced accountants have their fingers on the pulse of taxes and reliefs and are eager to help you make the most of your money by minimising your tax exposure and maximise your tax efficiency. Our expertise and experience will help you better manage your money in ways you can understand and safely implement.
What is Capital Gains Tax
Capital Gains Tax is the tax due on an asset when it is sold if it has increased in value. The gain you make is taxed, rather than the amount of money that you receive.
Some assets are tax free
Typical examples of when you will be subject to Capital Gains Tax is when you sell a property that is not your main residence or sell stock shares. Business are also subject to Capital Gains Tax.
There is also a tax-free exemption of £12,300. If your assets have appreciated significantly, then it is expected you'll exceed this allowance and will be exposed to Capital Gains Tax. To make things more complicated, the rate at which you pay CGT varies from 10% to 28%, depending on whether you're on a higher income tax band or if the gain is property related.
What you don't pay Capital Gains Tax on:
You're selling your main residential property
You're selling a car
Your possession is worth less than £6,000
You're gifting money to a spouse or civil partner or a charity
The gain is within your tax-free allowance
What is Inheritance Tax?
Inheritance Tax is a tax on the estate of someone who'd died.
To be applicable, the estate being passed on must be above the £325,000 threshold. The Inheritance Tax is applied at 40% of anything over the £325,000.
As with all types of tax there are exemptions and exclusions, so its important to discuss a plan for inheritance tax with your accountant ensure your hard-earned savings can be passed on in a tax-efficient manner.
Passing on a home
You can pass a home to your husband, wife or civil partner when you die with no inheritance tax to pay
If you own your home, your tax-free threshold can increase to £500,000 if:
you leave it to your children or grandchildren
your estate is worth less than £2 million