Lowes Magazine Issue 123


Capital Gains Tax – what is it?

CGT IS CHARGED ON PROFITS EARNED FROM SELLING an asset or a property you own which is not your main residence. The amount of Capital Gains Tax collected by the government increased by over £5 billion in the past two years, official figures from HM Revenue & Customs have shown. The government raised £14.9 billion in CGT receipts in 2021/22, up from £9.8 billion in 2019/20, in part as a result of rising house prices and changes to the tax rules. With the annual CGT exemption frozen until 2026 and inflationary increases in the value of assets, it is likely the amount raised in CGT will increase. An asset liable to CGT is any personal belonging worth over £6,000 (such as art, jewellery or antiques), as well as investments such as shares, unit trusts and investment trusts. CGT on property which is not your usual home has to be paid within 30 days of completion of the sale or disposal of the property. For anyone wishing to dispose of assets subject to CGT, individuals have annual exemptions of £12,300. To mitigate the potential impact of CGT tax takes above the annual exemption, married couples and civil partners can transfer assets between them allowing them to realise up to £24,600 of tax-free gains each tax year. Gifting an asset to a spouse or partner or a charity also falls outside of CGT liabilities. The annual CGT exemption and the low the rate of CGT payable when gains exceed the exemption, can be useful tools in financial planning. For example, where an individual requires extra income but does not want to utilise income wielding products, because they may push them into the next income tax bracket, or they may already be paying income tax of 40% or 45%, selling growth

If this is of concern to you or your family, Lowes can help. Please call 0191 281 8811 and we will arrange for one of our expert Advisers to contact you. While from October 2023 the government is implementing a lifetime care cost cap of an £86,000 contribution towards ‘personal’ care, the elements not included – accommodation including energy expenditure and food costs – are among those most affected by rising inflation. When planning for our later lives, there is a greater need now to factor in the potential need and cost of later life care. Later life care MEDICAL ADVANCEMENTS MEAN THAT MANY PEOPLE are living longer. But longer lives are not necessarily healthier ones. Recent statistics from the ONS show that, on average, males will spend 16.2yrs of their lives in poor health, and females 19.4 years. Increased life expectancy simply increases the need for care provision, putting even more pressure on the care system, as well as people’s finances. Rising costs, paired with eroding savings mean that care provision could become even less affordable for many, and this could see many middle-aged workers forced to provide care for their elderly relatives whilst still working. Latest data shows that already a fifth of workers aged 50-69 are providing care to others. Calculating CGT liability can be complex as it must factor in elements such as the original cost, cost of sale, sale price and income tax band. An Independent Financial Adviser can help you navigate the process. investments so that any CGT liability from the sale falls under the annual exemption limit enables them to access the cash (income) tax free. In addition, any gains that do exceed the exemption will be taxed at current CGT rate of 10% for standard rate tax payers and 20% for higher rate payers (28% for sale of second properties).

10 Lowes.co.uk

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