Capital Gains Tax is charged on the profits made when you sell certain assets such as the sale of shares and property. Here are some of the main ways you can reduce your Capital Gains Tax bill.
1. Use the Capital Gains Tax Allowance: Everyone has an annual Capital Gains allowance which lets you make money on your investments up to £12,300 (for the 20/21 tax year). You are not able to carry this forward to a future tax year if you don’t use it.
2. Transfer assets to your husband/wife or civil partner: In most cases you should be able to move assets between your spouse or civil partner. This means that you can use both Capital Gains tax allowances and for the 20/21 year this is £24,600.
3. Invest in an ISA: ISAs do not incur Capital Gains Tax and the current ISA allowance is £20,000 which you can invest tax free.
4. Invest in your Pension: Remember your income tax band shows the amount of Capital Gains tax you pay. You can reduce your taxable income by investing a higher percentage of your income into your pension.
This article is for general use only and is not intended to address your specific requirements. For help with your particular needs, please feel free to contact us on 01603-957599.