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Still time to utilise annual tax-free allowance

Source: HM Revenue & Customs | 12/02/20

We would like to remind our readers that there is still time to use the annual exemption for Capital Gains Tax (CGT). In the current 2019-20 tax year, this amounts to £12,000. This means that there is no CGT to pay on the first £12,000 of gains where you dispose of chargeable assets, such as property or stocks and shares.

If you are a married couple or civil partnership, you should ensure that each of party utilises their full annual exempt amount wherever possible. Any unused part of the annual exempt amount cannot be carried forward and is forfeited if unused in the current tax year.

CGT is usually charged at a simple flat rate of 20%. If you only pay basic rate tax and make a small capital gain, they may be subject to a reduced rate of CGT of 10%. Once the total of taxable income and gains exceed the higher rate threshold, the excess will be subject to 20% CGT. A higher rate of CGT (8% supplement) applies to gains on the disposal of chargeable residential property.

Planning notes

  1. If you have sold or are planning to sell any assets in the current tax year, it is important to ensure that you take full advantage of the annual CGT exemption and arrange your affairs accordingly. For example, capital losses are deducted from gains before net gains are calculated. Crystallising a loss that will waste the annual exemption should therefore be avoided.
  2. Any CGT due on chargeable gains that relate to the disposal of residential property on or after 6 April 2020 will be due within 30 days of completion. If you are considering selling a property soon, it would be beneficial to do so before the end of the current tax year. In this way you will benefit from an extended time period to pay any CGT due. This is because the payment date for any CGT due on residential property sales made before 6 April 2020 will be 31 January 2021.
  3. If you sell a residential property that has always been your family home - no periods of sub-letting - the new 30 day reporting and payment window will not apply as the gain will be covered by the Private Residence Relief.

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Some accountancy websites also provide pages and pages of tax information, helpsheets, etc. We prefer to give clients personally tailored advice. So, if you want details of tax rates and allowances just go to the HMRC website on which you should find what you’re looking for. If you need more individual advice please contact us.

Below are links to websites you may find of interest, but as we like to support our local community and clients, we have included links to websites that may be of interest:

HMRC

FT

BBC

VEALE WASBROUGH VIZARDS

CESP

PRACTICE INDEX

SIMCOMM ACADEMY

More Local:

FOOTPLATE EXPERIENCE

ANGLEBURY PRESS

OFFCAMBER.CO.UK

SANDISONS

Badger House,

Salisbury Road, Blandford Forum

Dorset DT11 7QD

Telephone: 01258 451234

Fax: 01258 453280

Sandisons is the trading name of Sandisons Limited. Registered office: Badger House, Salisbury Road, Blandford Forum, Dorset DT11 7QD.  Co. Reg. No. 05068291

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