Tax & Trust Planning - Capital Gains Tax

Capital Gains Tax is a tax levied on profits made from the sale of assets by individuals. Some assets (e g. a person's main residence, or car) are exempt from this tax and there is also an annual exemption allowance.

The capital gain on disposal of an asset is calculated as: disposal proceeds minus acquisition costs, costs of buying and selling and any enhancement cost (costs incurred in improving the value of the asset).

The following points, whilst not exhaustive, may assist you in your tax planning. Should you wish further information or advice then please contact us.

• Confirm that you have utilised the annual allowance of £7,900 (per person). Transfers between husband and wife can maximize the use of this allowance, as can crystallising any gains on investments.
  
  
• Check that any family trusts have used their annual allowance usually £3,950.
  
  
• If the gains, in excess of the annual exemption have already arisen, consider crystallising any losses on investments to set against the gains.
  
  
• Investments in VCTs or EISs provide the facility to roll over capital gains made during the year and any capital growth on the VCT or EIS investment can be free of capital gains tax.
  
  
• Where assets have become of negligible value, a claim should be made in order to establish a capital loss.
  
  
• Bed and breakfasting of stocks and shares is still permitted (providing the repurchase is made by the spouse of the disposer) by a trust in which the disposer has an interest (including one of which he is also the settlor) or by an existing PEP or an ISA.