19/07/2024
Capital Gains Tax (CGT) reliefs and planning
There are many CGT reliefs available that allow an individual/company to reduce or defer the CGT due. The common reliefs available include:
- Main residence relief – is available to an individual who occupied the property they sold as their main residence at any point during their ownership period. The gain is reduced by the portion of time they occupied the property as their main residence in relation to their total ownership period.
- Inter spousal gifts – Gifts between spouses do not attract any CGT change, the spouse who inherits the asset also inherits the original base cost of the transferred asset.
- Tax efficient investments – This would include EIS & SEIS investments, the value of these investments can reduce or defer any gain made.
- Business Asset Disposal Relief (BADR) – This allows gains on qualifying business assets to be taxed at 10%, subject to a £1m lifetime allowance.
- Holdover Relief – When assets are gifted for no proceeds a gain still arises as the market value of the asset is substituted for the deemed proceeds. For certain qualifying assets, a holdover relief claim can be used to defer the gain. This means no CGT is due on transfer, but the transferee inherits the original base cost of the asset.
- Use of losses – Capital losses on capital disposals in the same or prior years can be offset against chargeable gains made reducing the CGT due.
The above is just a snapshot of some of the available CGT reliefs and if you wish to know more please contact 023 8046 1237 or email Joe Wilson.
Or visit our personal tax services page for more information.
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