12 Top Tax Tips to Easter – #3 Reduce tax on capital gains

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Good planning and careful timing are critical if you want to maximise tax reliefs or minimise the tax bill on a transaction or investment, and to avoid falling foul of the system of penalties and interest levied by HM Revenue & Customs (HMRC).

The run-up to Easter is the perfect time to consider tax planning opportunities and to put in place strategies to minimise tax before the new tax year starts on 6th April 2016. That’s why we have launched a series of 12 tax tips to help you mitigate your tax bill.

Our 3rd tip of the series focuses on capital gains tax.

#3 Reduce tax on capital gains

  • Capital gains tax (“CGT”) is charged at 18% or 28% depending on your other income levels. Consider transferring assets to a spouse or civil partner who may pay tax at the lower rate.
  • Ensure you qualify for Entrepreneurs’ Relief on your trading business which reduces your rate of CGT rate down to 10% (lifetime limit of £10 million capital gains). The rules are complex and often planning needs to be in place a year before disposal so talk to us.
  • Consider investing in Venture Capital Trusts (VCT), Seed Enterprise Investment Schemes (SEIS) and Enterprise Investment Schemes (EIS) as these can give tax-free capital gains.
  • If you haven’t realised gains up to your annual CGT allowance of £11,100, take a look at whether assets can be sold before 6 April 2016. If you have used up your allowance, consider deferring selling assets until the next tax year.

Tax is a complex matter, so we recommend that professional advice is sought when considering any of the above. Our highly qualified and experienced tax team would be happy to discuss your tax affairs with you.

If you have any questions regarding your tax affairs, please do not hesitate to contact our tax team on 01491 579740.