More and more clients need to do some Capital Gains Tax planning (CGT) as investment valuations rise. So here are some things you may wish to consider as an accountant or solicitor.
The current CGT allowance is £11,700 per person, and it is always logical to make gains up to this value each year, because the allowance is a use it or lose it one.
If your client is looking at a big gain one year, try and flush out any smaller gains beforehand and do this under the limit, as these could be covered by the allowance.
Another thing to remember with allowances like this is that for married people, both husband and wife get the same allowance. If one spouse is looking at a gain and the other isn’t, is there anything to be done by transferring ownership of some assets between spouses, or indeed making some assets jointly owned? Gifts between husband and wife are exempt from any CGT, so this should be utilised as much as possible.
The entrepreneur’s rate is only 10% and the more we can allocate to this, if selling a business or part of a business, would be very helpful.
The main rates of course are 10% if someone is a basic rate taxpayer, and 20% if a higher rate taxpayer, so once again if you are looking at planning for spouses and the gain is being made by the higher-taxed person, see what you can gift between spouses, to reduce the tax payable.
This is especially true of residential property which is rented out, where gains made by basic rate taxpayers are charged at 18%, and higher rate taxpayers at 28%.
Although it mainly affects investors, perhaps more attention should be paid into putting more and more money into ISAs, which are not liable at all for CGT.
CGT deferral can also be made by investing in Enterprise Investment Scheme (EIS) companies, so this could give your clients time to plan. If an EIS company is invested in and held for three years, there is no CGT on a later disposal.
As independent IFAs who have done EIS investments for clients, we can look over the whole of the market to see the best one for your clients.
What not give us a call and let us help in your client’s overall tax planning?
If you would like to find out more information or would like to start investing today, please contact Money Advice & Planning Ltd on 0345 241 1808 or e-mail us at email@example.com.
The material is for general information only and does not constitute investment, tax, legal or other form of advice. You should not rely on this information to make (or refrain from making) any decisions. Links to external sites are for information only and do not constitute endorsement. Always obtain independent professional advice for your own particular situation. Money Advice & Planning Ltd is authorised and regulated by the Financial Conduct Authority.