The exemption for paying Capital Gains Tax (CGT) is changing.
The CGT annual exemption will fall from £12,300 to £6,000 from April 2023, before being cut in half again to £3,000 from April 2024.
CGT is what you pay on any gains that you make when you come to sell an asset, such as a second home or shares.
However, the annual CGT exemption allows you to make a certain value of gains before you pay tax on any additional gains.
Higher-rate or additional-rate taxpayers pay 28 per cent on gains from residential property and 20 per cent on gains from other chargeable assets.
If you are a basic-rate taxpayer, you will be charged 18 per cent on residential property and 10 per cent on other gains.
Steps that could reduce your CGT liabilities include:
Now is a great time for investors to review their portfolios and decide whether they should transfer or dispose of certain assets before these changes take place.
If you want to take advantage of the current CGT tax rate it is best to seek advice from a qualified tax adviser.
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