Capital Gains Tax Rates In The Budget: Still Favourable, But Maximising Allowances Is Key

As financial advisers, we often get asked about the implications of Capital Gains Tax (CGT) rates in the latest budget. The good news is that the current rates remain relatively favourable, providing opportunities for investors to optimise their returns. However, navigating the complexities of CGT and making the most of available allowances can be challenging without professional guidance.

Understanding Capital Gains Tax rates

Capital Gains Tax is levied on the profit made from selling an asset, such as shares, property, or other investments. The rates can vary depending on your income bracket and the type of asset sold. In the latest budget, the Government has increased the CGT rates from 10% and 20% to 18% and 24% respectively for individuals. The CGT rate for trustees has also increased from 20% to 24%.

Why working with a financial adviser matters

While the rates themselves are favourable, the real advantage comes from strategic planning. This is where a financial adviser can make a significant difference. By working with an adviser, you can ensure that you are utilising all available allowances and exemptions to minimise your tax liability. For instance, the annual CGT allowance allows you to release a certain amount of gains tax-free each year. An adviser can help you plan your asset sales to stay within this limit, thereby reducing your overall tax bill.

Maximising allowances and exemptions

In addition to the annual allowance, there are other strategies to consider. For example, gifting assets to a spouse or civil partner, using tax-efficient investment accounts, such as ISAs or timing the sale of assets to coincide with lower-income years can all help in managing CGT effectively. A financial adviser can provide personalised advice tailored to your specific situation, ensuring that you are making the most of these opportunities.

Comment

While the capital gains tax rates in the latest budget remain favourable, the key to maximising your investment returns lies in strategic planning and making full use of available allowances. By working with a financial adviser, you can navigate the complexities of CGT and ensure that you are optimising your tax position. Don’t leave your financial future to chance—seek professional advice and make the most of your investments.