Business owners and individuals in the UK both need to make sure they are aware of the complex rules governing Capital Gains Tax (CGT), as this tax can apply to the sale of anything deemed a ‘chargeable asset’.
Simply put, CGT is a tax paid on the gain made when an asset is sold, gifted or ‘disposed of’.
Anything deemed a ‘chargeable asset’ can potentially incur CGT, which is why it is important to seek specialist tax planning advice ahead of any disposal.
CGT for individuals
Typically, an individual will incur CGT when disposing of:

• Any property that is not their main residence.
• Shares that are not considered to be an ISA or PEP.
• Any personal possessions worth £6,000 or more (excluding motor vehicles).

It is worth noting that, in most cases, individuals will not incur CGT when disposing of their main residential property, due to a tax allowance known as ‘private residence relief’.
However, if they have previously let out the property or used it for ‘business purposes’, it may still be liable for CGT.
The same applies if the property is large – as homes, including their grounds, of more than 5,000 square metres (one acre) in total may not be entitled to full private residence relief.
Individuals should also note that each person is entitled to an annual CGT exemption or Annual Exempt Amount (AEA), which will vary depending on their circumstances.
CGT for business owners
Business owners will often incur CGT on the disposal of business assets such as:

• Land and buildings.
• Plant and machinery.
• Shares.
• Fixtures and fittings.
• Registered trade marks.
• The business’ reputation.

Fortunately, business owners can benefit from Entrepreneur’s Relief – a tax relief which enables sole traders, business partners or those who hold shares in a ‘personal company’ to pay just 10 per cent CGT on qualifying profits if they sell all or part of their business. This is just one of the many tax reliefs available.
Business owners should also keep in mind that they will not need to pay any tax on assets that are ‘gifted’ to a wife, husband or civil partner. This applies to all chargeable assets, not just business assets.
Furthermore, if business assets are intended to be passed on to the next generation as part of succession planning, gift relief can be claimed in such way which does not prevent this planning from being implemented.
Seeking specialist advice
Regardless of the circumstances, individuals and business owners alike need to think very carefully when they are considering disposing of any assets.
It is important to seek specialist tax advice in order to determine whether a disposal will qualify for CGT – and if CGT liability can be mitigated in any way.
Speak to our specialist tax team today to find out how we can help.