Capital Gains Tax
You have calculated that you may make a large gain if you dispose an asset. You are seriously thinking about selling, but are worried about the tax you will pay. What should you do?
Our first piece of advice is that you should work through the calculations with your Accountant or Tax Adviser to ensure that you have used all the reliefs to which you may be entitled, such as Entrepreneurs Relief, capital loss relief brought forward, transfers between spouses, etc.
Once you have calculated the reliefs, you can work out the effective rate of tax that you would pay if you made the disposal. Given that most disposals will result in a maximum capital gains tax rate of 18%, you may consider that tax planning would not be worthwhile. To be honest, we would probably agree with you!
But if you would like to consider alternative options, then the advice we can give you would (as always) depend on the circumstances of the transaction. For example, if you have already made the disposal, then you may wish to consider whether any statutory reliefs are available to you, perhaps via a Government Incentivised Scheme.
Alternatively, if you have not yet spoken to any potential sellers, it might be that a completely different approach could be required.
A word of caution though!
There are a small number of Service Providers that still offer "Loss Creation" strategies, where they claim you can offset a gain against a loss, despite the introduction of a Targeted Anti-Avoidance Rule which effectively stops these. We believe that these types of schemes should be avoided if your motive for entering into the deal is simply to avoid tax. If you have seen a scheme, and would like our independent opinion to check that it is not this type of "Loss Creation" planning, please do get in touch. (Click Here)
Nevertheless, it might be that you can legitimately plan your disposal such that you minimise the tax payable.
We can talk to you about your circumstances and if appropriate, we can introduce you to specialists that might be able to help you.
If you would like to talk to us about Capital Gains Tax, please complete the attached questionnaire, and we will contact you as soon as we can.
