Capital Gains Tax: How to pay less to HMRC – four tips everyone should know | Personal Finance | Finance
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Capital Gains Tax is a levy charged on the profit a person makes when they sell or gift something which has increased in value. However, there are four ways to pay less tax to HM Revenue and Customs.
When it comes to selling shares, investments or possessions Britons have a tax-free allowance of £12,300.
If a person’s gains are above their Capital Gains Tax (CGT) allowance, they will need to report this and then pay the tax they owe to HMRC.
Basic rate taxpayers pay CGT at 10 percent, rising to 20 percent for higher-rate taxpayers.
This rises to 28 percent when selling an investment property or second home.
READ MORE: National Insurance update: Increase to go ahead in April
How can I reduce my Capital Gains Tax bill?
Use your Capital Gains Tax exemption
- Britons are allowed to make tax-free gains of up to £12,300 in the 2021/22 tax year as part of their annual CGT exemption. Use it or lose it as it can’t be carried over.
Make the most of losses
- Limit the tax one has to pay by offsetting losses. Any gains and losses from the same tax year can be offset against each other, which then affects the amount of gain that is subject to tax.
Meanwhile, one change that could actually be good news for British taxpayers is that they will now have 60 days to report and pay following the sale of a property.
This will be a welcome change for many Britons who complained that 30 days wasn’t long enough.
The move was announced following a report from the Office for Tax Simplification, claiming the 30-day deadline was challenging for taxpayers.
It came into effect on October 27, 2021 so anyone selling a property after this date has 60 days to report and pay the CGT that’s owed.
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