Capital Gains Tax and the reliefs available
This is a tax on the profit when you sell (or ‘dispose of’) something (an ‘asset’) that’s increased in value. It’s the gain you make that’s taxed, not the amount of money you receive.
Any chargeable gains are included in the corporation tax return and taxed along with your business profits, using the same tax rate. The tax due can be reduced, deferred or eliminated altogether by making use of available allowances, reliefs and exemptions.
Examples include: –
Business Roll Over Relief – The tax on company capital gains can be deferred if the disposal proceeds are reinvested in qualifying business assets.
For example; if you sell your business premises and buy new premises. This business roll-over relief typically works by deducting the chargeable gain from the cost of the new asset so that when you later sell this new asset, the gains are correspondingly higher.
Relief is also available on profits made when shares obtained through schemes such as Seed Enterprise Investment (SEI) scheme or Enterprise Investment scheme (EIS) shares – this is where you invest in small early stage start-ups and small unquoted companies carrying on a qualifying trade in the UK) and those shares are sold proving they meet the qualifying criteria and have been held for the requisite time.
Relief may also be available if you sell shares in a company where you own a substantial shareholding or where assets are transferred between companies in the same group.
The rules and regulations around Capital Gains Tax is vast and that is why having the help from an accountant to complete your Capital Gains Tax supplement in the tax return can save you a lot of money with the experience and knowledge, especially with changing rules every year.
Disclaimer:- The information contained herein is given by way of general guidance only and no action should be taken solely on the basis of the information contained herein. The Avanti Group (UK) Ltd will be pleased to provide further guidance on the issues, and how they might affect you. No liability is accepted by the firm for any action taken without seeking appropriate professional advice.