CGT Disclosures

Capital Gains Tax (CGT) is a federal fee one pays on the profit made from selling certain types of assets. These include stock investments or real estate property primarily but may also include sale of machinery etc. A capital gain is calculated as the total sale price minus the original cost of an asset. CGT only becomes due once one sells his/her investment. For example, you won’t owe tax while stock gains value inside your portfolio. However, once you sell your shares, the profit must be reported on your tax returns. As a result, you pay a tax on profit at the current capital gains rate. Under current federal taxation policy, CGT rate applies only to profits from sale of assets held for more than a year (long-term capital gains). The rates are 0%, 15%, or 20%, depending on the taxpayer’s tax bracket for the particular year.

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There are two standard capital tax rates for long- and short-term investments:

• Short-term capital gains tax rate

All short-term capital gains are taxed at the regular income tax rate. From a tax perspective, it usually makes sense to hold onto investments for more than a year.

• Long-term capital gains tax rate

The tax rate paid on most capital gains depends on the income tax bracket. The Capital Gains tax free allowance is £12,300 for the 2020-21 tax year. If your capital gains are above this limit they will be added to your taxable income and taxed according to your tax bracket.

Capital Gains Tax Rates

 Tax bracket CGT rate on assets CGT rate on property
 Basic-rate payer 10% 18%
 Higher or additional-rate payer 20% 28%

Capital gains tax allowance for 2021-22 is £12,300, the same as it was in 2020-21. This is the amount of profit you can make from an asset this tax year before any tax is payable. If your assets are owned jointly with another person, you can use both of your allowances, which can effectively double the amount you can make before CGT is due. If you are married or in a civil partnership, you are free to transfer assets to each other without any CGT being charged.

The table below explains your CGT allowance for the tax years 2020-21 and 2021-22

Tax year2020-20212021-2022
Allowance for individuals£12,300/-£12,300/-
Couples’ Allowance£24,600/-£24,600/-

However, if you choose to transfer any of your assets to your partner, bear in mind that, if later you sell it, you’ll be charged based on the gains made during the period it was owned by you as a couple, rather than only since the asset was passed to your partner. If you don’t make full use of your CGT allowance in a given tax year, you aren’t allowed to carry it forward to the next one.

This year, HMRC changed the rules for reporting Capital Gains and the tax on Capital Gains because of disposal of residential properties. Now you must file a Capital Gains Tax Return to HMRC within 30 days of the disposal of an asset, whereas before you were able to wait until it was time to file a Self-Assessment Tax Return for the tax year in which the disposal was made. Should you fail to report the disposal to HMRC and pay Capital Gains Tax because of the disposal within the new 30-day time limit, you will face financial penalties.

The HMRC website states that:

“If you sold your property after the 6th of April 2020, you must report and pay Capital Gains Tax within 30 days of selling property in the UK. You may have to pay interest and a penalty if you do not report gains on property within the time limit”.

Here at Lanop, our experts ensure that you report correct Capital Gains to HMRC and pay Capital Gains Tax at the appropriate time. We offer full Capital Gains Tax services that include our full consideration of the reliefs available to reduce potential Capital Gains Tax to the minimum level possible, while remaining within the bounds of UK law.

This is not just limited to property transactions. At Lanop, we provide full Capital Gains Tax service on disposal of shares and as well as other CGT relevant assets. We know that tax issues are extremely worrisome for clients, that’s why Lanop guarantees an initial Capital Gains Computation within 24 hours of you providing us with requisite information.

Lanop has a proven history of reducing Capital Gains Tax for our clients by considering all relevant facts and information and ensuring accurate advice on the most cost-effective way of reporting Capital Gains to HMRC.

The CGT Experts that You Need

Lanop Accountants eliminates the need to search for an all-encompassing accountancy firm. Our corporate headquarters in Putney, London provide practical and efficient solutions to all your accounting needs.

Our skilled tax and finance professionals work diligently to make your life simpler by reducing financial stress and making business models more lucrative and efficient in accordance with up-to-date regulations.

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