Capital Gains Tax is an important consideration for anyone disposing of assets, and understanding key reliefs can help reduce bills. As rules evolve, many people seek guidance to support long term planning. The measures below outline several practical ways to manage CGT exposure.
Use Annual Allowances Wisely
Everyone has a CGT exemption of £3,000. Using it annually can help limit future liabilities. Gains above this amount may be taxable, so spreading disposals across tax years can be beneficial.
Consider Spousal Transfers
Transfers between spouses and civil partners are exempt from CGT, allowing households to use both allowances. This can assist where assets have risen in value. Transfers must be genuine gifts to meet HMRC requirements.
Review Pension Contributions
Pension contributions may reduce the CGT rate payable by extending the basic rate band. For those with relevant earnings, this can combine retirement savings with tax efficiency.
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Explore Enterprise Investment Scheme Opportunities
The Enterprise Investment Scheme offers reliefs, including potential tax-free gains after a qualifying period, and may allow deferral of existing gains. EIS investments are higher risk, so advice is recommended.
Understand Chattel Exemptions
Some personal possessions, known as chattels, can be exempt from CGT. Wasting assets such as classic cars and boats generally fall outside the charge, while other items may qualify if sale proceeds are below set limits.
Seek Personalised Support
Professional advice helps individuals navigate available reliefs and build appropriate strategies for managing CGT with confidence.
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