People tax planning in Oswestry and Cheshire may have paid attention to one aspect of the November Budget in particular.
The Chancellor of the Exchequer, Rachel Reeves, is increasingly relying on background taxes to raise revenue. This means that whilst the headline rates of income tax did not increase, UK taxpayers are still likely to pay more in the forthcoming years.
One specific area the government has targeted is Capital Gains Tax (CGT). The latest data indicates that HMRC will take £30 billion by the end of 2030/31, compared with £13.7 billion at the beginning of this parliament. CGT is levied on the profits of asset transactions, which typically include second homes, art and jewellery, valued at over £6,000 each.
So how can British taxpayers reduce their exposure to CGT? With well-structured tax planning, there are various options available that are both effective and legitimate. One of these is to maximise use of both your and a spouse’s tax-free allowance. A couple can transfer assets amongst each other without being liable for tax. You might also wish to consider using your £20,000 ISA annual allowance, protecting your portfolio in ISAs.
Some people may also use any losses incurred during a taxable asset transaction to offset gains in other years. Another option is to think about deferring asset sales until you are classed in a lower tax band. You can reduce the CGT rate substantially by delaying until you are in a lower income period of your life such as post-retirement.
