How to Avoid or Reduce Capital Gains Tax
There are ways around paying Capital Gains tax short term, if you are married or in a Civil Partnership you may wish to transfer the asset to your spouse or have joint ownership there by having 2 lots of CGT exemption to set against any gain on disposal of an asset.
Chose your assets carefully, for instance investing in an appreciating classic car will mean you will not pay any capital gains when you sell it as there is no capital gains on the sale of motor cars. Other assets such as paintings and antiques are exempt from CGT if the sale price is less than £6,000.
In essence you will merely defer the date Capital Gains Tax is paid or transfer it on to another person.
Capital Gains Taper Relief
Taper relief was a very important relief which was available to business and individuals alike. It allowed a percentage deduction to made from the gain based on the number of years an asset was held. Taper relief was abolished in the Finance Act 2008 any disposals after the 6th April cannot benefit from Taper Relief. At the same time Entrepreneurs Relief was introduced, this still had the effect of reducing the marginal rate of Capital Gains Tax to 10% on the first £1,000,000 of gain from the sale of a business. The allowance was increased to £2,000,000 and finally to £5,000,000 by the current government.
Entrepreneurs Relief is a lifetime allowance, this means that you can dispose of as many business assets as you wish over your lifetime but the sum total of relief available is £5,000,000 so if you sell business assets over your life time with a gain of say £7,000,000 you will receive relief on just £5,000,000 you will pay 40% CGT on the balance.
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