Following our theme of the seven deadly sins of tax planning, or in other words seven key things to make sure that you avoid prior to the 5 April 2019, this time we consider… not making use of your annual capital gains tax allowance.
Each of us in entitled to generate capital gains of up to £11,700 (in 18/19) before we pay any capital gains tax on them. The allowance does not carry forward and so it makes sense to use it up each year. It will apply to sales of investments, shares and also properties, though any capital gain made on your home should be tax free regardless.
If you are a basic rate taxpayer you will pay 10% on any gains over and above this, higher or additional rate taxpayers pay 20%. The rates increase by 8% if the gain is made on the sale of residential property.
Remember also that timing is everything. If you have an investment standing at a gain of £23,400, selling part in 2018/19 and part in 2019/20 will save you capital gains tax of £2,340, based on the £11,700 allowance.
For more information, please contact Lesley Sutton on 01484 550037 or email email@example.com.