How can you cut your tax bill ?

CGT is charged at 28% on residential property and 20% on other assets such as listed investments. A lower rate of 18% for property and 10% for other assets can also apply for basic rate taxpayers on smaller gains.

The easiest way to avoid paying CGT is to invest via an ISA or a self-invested personal pension. This protects investments and savings from taxes on income and gains. You can put up to £20,000 in an ISA and £40,000 into a pension each tax year.

This offers no protection for residential property assets, but there are other ways to mitigate the tax. One of them is combining your £12,300 annual tax free allowance with your spouse or civil partner. This doubles the amount you can shelter from the taxman.

If you previously made a loss on an investment or property and made a record of it, you can also use this to offset any future gain that is subject to CGT.

Longer- term planning can also include waiting to sell the asset until your income is reduced.-after you have retired , for example. This means you could end up paying a lower rate of tax on the gain.

Another option would be not selling the asset at all, as CGT does not apply after death. This is useful if there is no inheritance tax to pay, or if the asset qualifies for relief from the 40% death duty.

Share on facebook
Share on twitter
Share on linkedin
Share on whatsapp
Share on email

Leave a Comment

Your email address will not be published. Required fields are marked *