What is capital gains tax?

Capital Gains Tax is a type of tax that is payable on the profit you make when you sell, give away or otherwise dispose of assets that you own. It also applies to exchanges of assets and receiving compensation for assets, such as through insurance. The tax is payable not on the amount you receive for the asset, but for the gain you have made from the sale. CGT applies to a wide range of types of property transaction, including shares and property.

A taxation solicitor can explain the tax-free allowance and additional reliefs that may be available to you to reduce your CGT bill. It is important to structure your financial transaction and estate management with consideration given to the tax implications of different transactions. A taxation solicitor may advise you to hold off on or delay certain transactions so as to minimise taxation liabilities over a period of a few years or so. A taxation solicitor can save you considerable money in doing so.

A taxation lawyer will also need to advise you in relation to the CGT implications in relation to gifts, inheritance and divorce. Some of these transactions may be exempt from CGT liability. For example, a gift made to a spouse, civil partner or charity usually won't lead to liability for CGT on that transaction, whereas making a gift to a child or other people or companies usually will encounter CGT.

As a further example, you are not liable to pay CGT upon the inheritance of an asset, but you may be liable for CGT when you later sell or dispose of it. And, when you transfer assets between ex-partners in the situation of divorce, separation or dissolution of a civil partnership, it is a complex issue as to whether you are liable to pay CGT. Potential CGT liability depends upon factors such as the date of transfer and whether the partners/ex-partners were living together at the time of the transfer.

Such considerations can therefore have an important impact on your choices in relation to dealing with your assets, particularly when they are of high value and thus the CGT implications are high. Before carrying out any relevant transactions, obtain financial and legal advice from a taxation solicitor.

So if you have any questions or would like our help in finding local tax and commercial solicitors please call us at 0800 1777 162 or complete the web-form above.