If you are anxious about probable gains and how to avoid capital gains tax then I hope this post will guide you.!
Recent changes to capital gains tax could have been a lot worse. The Chancellor George Osborne announced the changes in the emergency budget earlier this year.
Under the previous government capital gains tax was at 18% This was originally implemented by the previous Chancellor Alistair Darling.
The changes made a link between income and CGT for tax purposes. The annual CGt exemption has not changed, but CGT is now added to your income to work out the level of tax you might pay.Once the gains is added to your income , this will determine the tax rate payable.
When the gain is added to your income you become a higher rate tax payer then the CGT rate will be 28%What to do next?
There are ways to review and reduce the amount of CGT you might pay. Using your annual exemption and isa allowance will make a difference. It is also worth considering pension planning and if necessary transferring assets between husband and wife. Transferring assets allows you to use both annual allowances.
Property Investors have a different problem. Large Capital Gains have been generated over the last ten years. You usually cannot sell a part of a property and this causes many problems re CGT. This means that when investors in property make a gain it is usually quite large. I would imagine for many investors paying CGT would not be a preferable option. One way of course of not paying capital gains tax is not to sell the asset. Keep hold of it, let it generate an income and on death the asset would not be subject to capital gains tax. Obviously you have to consider inheritance tax and the implications it may have on your own children or beneficiaries.
More information on how to avoid capital gains tax can be found at
The financial services authority does not regulate some issues with tax planning.