Posted on | by Jade Donno

Capital Gains Tax: Understanding the Latest Changes and Updates

Are you looking for comprehensive guidance on Capital Gains Tax (CGT)? Understanding the latest changes and updates is crucial for effective tax planning and compliance. In this blog, we’ll break down the recent developments in CGT to help you stay informed and make smart financial decisions.

What is Capital Gains Tax (CGT)?

Capital Gains Tax (CGT) is a tax on the profit when you sell an asset that has increased in value. It’s the gain that is taxed, not the total amount of money received. Common assets that may incur CGT include property, shares, and other investments.

Key Changes to Capital Gains Tax in 2024/2025

Staying updated on the latest CGT changes is essential for accurate tax filing and maximising your financial benefits. Here are the key updates for 2024/2025:

  1. Exemptions and Thresholds:
    • The annual CGT exemption amount has been adjusted. For individuals, the new threshold is £3,000, down from £6,000.
  2. Adjustments to CGT Rates:
    • The CGT rates have been revised. For higher-rate taxpayers, the rate on gains from residential property is now 24%, while gains from other assets are taxed at 20%.
  3. Reporting and Payment Deadlines:
    • The deadline for reporting and paying CGT on residential property sales is 60 days from the completion date.  Ensure you comply to avoid penalties.

How to Calculate Your Capital Gains Tax

Understanding how to calculate your CGT liability can save you from overpaying. Follow these steps:

  1. Determine the Gain:
    • Subtract the purchase price and any allowable expenses (such as legal fees, and improvement costs) from the selling price.
  2. Apply Exemptions:
    • Deduct your annual CGT exemption amount from the gain.
  3. Apply the Appropriate Tax Rate:
    • Depending on your total taxable income and the type of asset, apply the relevant CGT rate.

Tips to Minimise Your Capital Gains Tax

  1. Utilise Tax-Free Allowances:
    • Make the most of your annual CGT exemption by strategically planning your asset sales.
  2. Claim All Allowable Expenses:
    • Keep detailed records of all costs associated with acquiring and improving your assets.
  3. Consider Timing:
    • If possible, plan your asset sales to fall within different tax years to maximise the use of your allowances and reliefs.

Seeking Professional Help

Navigating CGT can be complex, and professional advice can be invaluable. A tax advisor can help you understand the latest changes, optimise your tax position, and ensure compliance.

Conclusion

Staying informed about the latest changes and updates to Capital Gains Tax is crucial for effective tax planning. By understanding the new thresholds, rates, and reliefs, you can make more informed decisions and potentially reduce your tax liability. If you need personalised assistance, don’t hesitate to seek professional help.

For more detailed information and expert advice on Capital Gains Tax, contact us at www.1accounts.co.uk.

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