Generally, any person who is resident or ordinarily resident in the UK for all or any part of a tax year is liable to Capital Gains Tax (CGT) on chargeable gains made in that year. Payment is due by 31 January after the end of the tax year. Companies are chargeable to Corporation Tax in respect of their chargeable gains. If you are thinking of disposing of an asset, contact us, there are many reliefs available and pre-transaction planning is vital to minimise any tax due.
Annual exemption
An individual has an annual exemption for each tax year and a liability to CGT only arises if net gains exceed this exempt amount.
Entrepreneurs’ relief
Entrepreneurs’s relief is a CGT concession on qualifying business disposals, providing a 10% CGT rate on business sales – up to a maximum lifetime allowance of £10m. A flat CGT rate of 18% applies in cases for basic rate tax payers and 28% for higher rate tax payers.
There are a number of conditions which apply for business owners who wish to use Entrepreneurs’ Relief. Here are some of the key conditions;
- A business disposal can apply to the whole business, or merely a part of it,
- Entrepreneurs’ relief only applies to individual taxpayers,
- The relief is not retrospective, and will not include past disposals,
- Relief can apply to business shares, providing the claimant owns at least 5% of the company (and has voting rights), and is an officer or employee of the company.
Rollover relief
Traders may claim this relief when disposing of a qualifying business asset and acquiring another qualifying business asset.
Gifts Holdover Relief
The gain on gifts of certain assets can be held-over and do not become immediately chargeable.