Capital gains tax

Whenever you dispose of a capital asset, there is the possibility that you will need to pay tax on the difference between its purchase price and its sale price (or market value in some instances). Capital Gains Tax (“CGT”) commonly applies to sales of property (both leasehold and freehold) and shares but there are many other assets that are caught. It is important to be aware that is applies to disposals of assets. A disposal can be a sale or gift. Thus you can pay tax on something that you have received no money for!

Our job is to advise you on how to minimise this tax. This could be achieved by claiming the various reliefs available (such as principal private residence relief where you sell a property that has been your home at some time during your ownership) or it could revolve around the timing of a disposal. Where you are involved in a business it is important to ensure your interest is structured to take advantage of the 10% CGT rate available known as “entrepreneurs relief”. We could also advise swapping one asset for another to defer a CGT bill – possibly indefinitely.

CGT issues are integral to estate planning and general tax planning and can range from the reorganisation of a group of companies to selling a small holding of a quoted share.

The key issue is usually timing. Any planning has to be done well in advance of the disposal. Once the transaction has completed it is usually too late. Indeed, in some instances is too late where negotiations for sale have only just begun. It may even be too late if an asset has merely been advertised.

Thus if you are thinking of selling an asset and CGT may be an issue, please do get in touch to discuss the possibilities of mitigating any tax. You can call Stuart Abbott on 01423 564446 or email Stuart at Stuart.Abbott@lithgow-perkins.co.uk.