How to reduce your Capital Gains Tax     

Do you own a residential property personally, and plan on selling it in the not-so-distant future? We can help you reduce your capital gains tax!  

If you own a residential property personally, and you sell your property, the gain is subject to capital gains tax at 28%, after you have utilised your capital gains tax allowance. – Don’t forget! The capital gains tax allowance has been reduced from £12,300 to £6,000 from the 6th of April 2023. 
 

EXAMPLE 1:
 
Sales proceed                                                                                            £400,000 
Costs associated with sales and purchase        -£10,000 
Improvements                                                       -£40,000 
Purchase price                                                     -£250,000 
                                                                                                                    -£300,000 
 
Annual exemption                                                                                       -£6,000 
 
Taxable Gain                                                                                                £94,000 
 
Tax Due                                                                                                        £26,320  

 



If your property were to qualify as a furnished holiday let (FHL), we would be able to take advantage of business asset disposal relief and reduce the capital gains tax rate to 10%. 
 

The property must qualify as a FHL for at least two years before the business ceased, and the disposal must take place within 3 years of the cessation. Therefore, 2 years of FHL business, allows you to enjoy business asset disposal relief for the entire gain! 


EXAMPLE 2:
 
Sales proceed                                                                                            £400,000 
Costs associated with sales and purchase        -£10,000 
Improvements                                                       -£40,000 
Purchase price                                                     -£250,000 
                                                                                                                    -£300,000 
 
Annual exemption                                                                                       -£6,000 
 
Taxable Gain                                                                                                £94,000 
 
Tax Due                                                                                                          £9,400  

 
 
This results in a total tax saving of £16,920. 
 

If you would like some assistance or advice on your Limited Company contact us today!

If you would like some assistance or advice on how to reduce your capital gains tax contact us today!


Please get in touch on 01273 441187 or book a discovery call with one of our expert accountants. 
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