Capital Gains Tax is a very important tax within the UK system, yet it doesn’t affect everyone. As such, there are many business owners and individuals out there who are unsure if they are even required to pay it, yet alone how the payments work.
For this reason and many more, it’s hard to ignore the benefits of Capital Gains Tax advice. If you want to ensure you complete your taxes correctly, potentially saving money in the process, hiring professional tax advisers is a smart way to make sure your payments are processed smoothly and correctly.
So, just what is Capital Gains Tax and what do you need to know?
What Is Capital Gains Tax?
In short, ‘capital gains’ refers to the profits accrued on capital goods that you have generated a gain or profit on. This typically refers to goods and items, but it can also refer to financial stocks and shares, as these still have a recorded value that changes. In short, if you can buy a capital item and sell it for profit, it may be liable for capital gains.
However, it’s important to note only the profits are taxed. So, if you purchase something for £1,000 but later sell it for £5,000, you are only taxed on the £4,000 profit generated.
Who Does Capital Gain Tax Apply To?
Capital gains applies to anyone making a capital gain, including businesses and sole traders. There are, however, some exceptions. Gifts and betting winnings are not liable.
Capital Gains Tax impacts UK residents and businesses if they sell assets based anywhere in the world. Conversely, it applies to overseas residents who sell assets in the UK.
Each year there is an amount you can dispose of and make a capital gain without paying tax. This is known as the annual exemption.
Why Should You Seek Capital Gains Tax Advice?
While the premise of Capital Gains Tax is simple, the exact details can make the process rather complicated. Failing to identify and pay on your capital gains can have serious consequences in the future, while miscalculating the value (such as declaring the whole sale value, not just the gains) can cause you to pay unnecessary amounts.
This is why working with professional, chartered accountants can make the entire process simpler. We will work with you to explain what you do and do not need to pay. By identifying all the possible ways to save money, we can ensure you are more aware of your tax situation and can cope with future issues.
Of course, having experts on hand also ensures that someone is available to do the hard work for you. If you’re busy running a business, selling goods or otherwise handling the various tasks of day to day life, it’s difficult to find the time to sit down and calculate what you owe. By entrusting professionals, you can ensure everything is taken care of correctly.