Capital Gains Tax: You could reduce your bill by taking action now – how to do it

Martin Lewis outlines ideas to alleviate impacts of tax hikes

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It is typically applicable to shares, investment funds, second properties, inherited properties, the sale of a business or valuables including art, jewellery and antiques that are worth £6,000 or more. It is possible to limit capital gains tax liability by making the most of losses to reduce gain.

This is because any gains and losses from the same tax year must be offset against each other, which then effects the amount of gain that is subject to tax.

People who transfer assets to a spouse or civil partner are exempt from paying capital gains tax.

This doubles the CGT exemption to £24,600 for married couples and civil partners.

The exception to this is if the couple were separated and did not live together at all during the relevant tax year.

The tax year runs from April 6 to April 5 the following year.

If the spouse or civil partner later sells the asset, they may have to pay tax on any gain if the asset was disposed of.

Their gain will be calculated on the difference in value between when they first owned the asset and when they disposed of it.

It is important for people to keep a record of how much they paid for each asset.

Another way of getting getting capital gains tax relief is by giving land, property or shares away to a charity.

However, if a person sells an asset to charity for both more than they paid for it and less than its market value, it will not be exempt from CGT.

Capital gains tax is the profit made when an asset is sold for more than it cost to acquire.

It’s calculated from the gain made (the increase in value of the sale price compared to the purchase price) for an asset held for more than one year.

The Government website explains it is the gain a person makes that is taxed – not the amount of money they receive.

People only need to pay it on gains that exceed their annual tax-free allowance.

The first £12,300 of capital gains each year is exempt from tax CGT is charged at 10 percent for basic rate taxpayers.

It is important for individuals to notify HMRC if they sell their property or land.

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This applies even if their gain is below the tax-free allowance or they made a loss.

People need to inform Her Majesty’s Revenue and Customs (HMRC) if their taxable gains are more than four times their allowance. They also need to report their gains in their tax return if they have registered for self-assessment.

A self-assessment (or SA100 form) is a system that HMRC uses to find out how much income tax and National Insurance a person needs to pay on any income that isn’t taxed at source.

People do not need to pay capital gains tax on gains made from Individual Savings Accounts (ISA), UK Government gilts and Premium Bonds, betting, lottery or pools winnings.

Britons are always encouraged to do their research and seek financial advice if necessary when making decisions on tax-related issues.

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