Can you Reduce Capital Gains Tax on your property?
Capital gains tax is the tax on any wealth (money/property) that is then used to make additional wealth or increase the value of that current wealth. For example, this could be through making capital improvements to your property to increase the value of this property.
Everyone has an allowance of £6,000 annually that would enable you to make capital investments up to this amount tax-free. This allowance cannot be carried forward to the next year if it is not used. It is important to note that the allowance for capital gains tax will be reduced to £3,000 from April 2024.
One way in which you can reduce your capital gains bill is by gifting assets to your spouse/ civil partner, as they will also have an allowance of £6,000 which can be utilised.
Another way to reduce your capital gains bill is through contributing to a pension as this contribution will increase your basic rate band for your taxable income.
Making charitable donations is another great way to increase your basic rate income tax band, causing more of your capital gains to fall into a lower income tax band.
Additionally, you can offset losses against these capital gains. Disposing of an asset can be used to reduce the taxable amount of a capital gain.
Reducing taxable income can also be a great way of reducing your capital gains tax bill, as it can help to reduce what capital gains tax rate is used for your capital gains. You can do this through pension salary sacrifices, childcare checks and reassigning taxable income like cash to the spouse with the lower income.
Spreading gains over tax years is another great way to reduce capital gains tax. This would be through dividing the realised amount over years to reduce the overall tax paid in the year.
An Individual Savings Account (ISA) is another way to reduce capital gains tax as any gains made inside an ISA account are free from Capital gains tax.
If you have any questions or require any advice specific to your circumstances, please contact us at PJCO. You can book a free discovery call by clicking the link below!
Please get in touch on 01273 441187 or book a discovery call with one of our expert accountants.
Contact
You May Also Like…
In the corporate world, sometimes things aren’t exactly black and white when it comes to accounting procedures.
George W. Bush
