Many people will at some point in their lives face a capital gains tax (CGT) bill. At that point, they will benefit from an adviser’s help in navigating the rules that apply.
To fully understand the CGT regime and its benefits, it’s worthwhile going back to the fundamentals.
At its simplest, a gain arises on a sale if what you get for it is more than what you paid. But you need to know how to work out a gain when you sell shares, particularly when they’ve been bought at different times and at different prices.
It’s also important to know how relief can be claimed if a loss arises on a sale. As well as reliefs, every individual is entitled to an annual exemption. Only net gains exceeding the exempt amount of £11,700 from 6 April 2018 will attract tax at 10 per cent and/or 20 per cent. This is clearly a favourable outcome when compared with the highest income tax rates.
High income individuals may want to choose investments aimed at capital appreciation rather than income growth. There are many tax planning opportunities that arise from being able to transfer assets between spouses and registered civil partners, without triggering an immediate CGT charge. Planning opportunities are also available on death, as well as in life, since gains are extinguished on death.
Our factsheet below uses case studies to delve into the CGT rules which apply to the sale of quoted shares and securities by a UK resident and domiciled individual. We hope it will support you in helping clients take advantage of the many benefits the CGT regime has to offer.