Most of our readers will be aware that they can make chargeable gains of up to £11,100 in the tax year 2015-16 and pay no CGT. This exemption cannot be transferred to a future tax year or carried back to a previous tax year if it is not utilised.
Many will also remember that it is no longer feasible to sell shares before 6 April 2016 in order to crystallise a CGT loss or a gain that is covered by the above exemption, if those shares, or part of them, are reacquired within 30 days of the disposal. However, it is still possible to reacquire holdings, within the 30 days period, if you use an ISA or self invested personal pension (SIPP) to make the buy-back.
Transfers of chargeable assets for CGT purposes are exempt between spouses and civil partners. Also, the annual exemption is available to both parties. This combination means that couples may be able to share the gain on a disposal of assets and reduce their overall CGT charge.
This strategy, of transferring partial ownership to a spouse, can also reduce an overall CGT charge if the transferring partner/spouse is due to pay CGT at the higher 28% rate (as their gains fall to be taxed in the higher rate tax band) and the receiving partner/spouse would only be liable to pay CGT at 18% (as their share of a transferred gain would fall into their free basic rate band).
And don’t forget, CGT is assessed and payable as part of your Self Assessment. Any tax payable for 2015-16 will be due for payment 31 January 2017. On the same day you will also have to pay any other underpayment of Income Tax for 2015-16 and your first payment on account for 2016-17.
If you own assets that are subject to CGT on disposal, and you, and possibly your spouse, are struggling to fully utilise your CGT annual exemption, or you would like to discuss ways to minimise any CGT payable, please call to discuss your options