Capital gains tax

What is capital gains tax?

Capital gains tax (CGT) is a tax on profits from any asset you dispose of. It could be anything from shares in a company, to artwork, but it is most commonly associated with the disposal of a second home.

The rate of CGT varies depending on whether you are selling a residential property or not, and whether you are a basic rate, or an additional / higher rate payer. Basic rate payers pay 10% (or 18% for a residential property), whilst additional / higher rate payers could pay 20% (or 28% for a residential property).

This could mean in certain cases you may have to surrender over a quarter of your profits to HMRC to pay CGT. An understanding of the process and reliefs available therefore becomes incredibly important.

Furthermore, the real time capital gains tax service means residential property sellers now only have 30 days from completion to calculate, report and pay taxes due, or risk interest and penalties. That’s a lot to understand and get right in a short space of time.

The capital gains tax process.

A big part of the capital gains tax process is about establishing the facts. We will initially work to find out all about the disposed through a series of discussions. How long you have held the asset for, purchase and sale price, any conditions around its use, if you had a property did you let it or reside in it, make any improvements to it and so on.

This information is then needed to pull together the details of the gain. Then we will work to explore all available reliefs to hand to reduce the gain as much as possible. This comes together in a comprehensive analysis detailing the calculation made, how we have assessed the tax and employed reliefs available. These calculations are not just for you, as they are required by HMRC to accompany any submission. We take care of all of this for you.

Finally we will then see out the return until acceptance, advise you of what and how to pay and hold your hand throughout the whole process and ensure you will have all the information necessary to accompany your tax return too should you need it.