Do you understand Capital Gains Taxation? McDade Roberts are here to help explain what you need to know.
Capital gains are taxed at the effective rate of corporation tax (20%). Gains are calculated after deducting from the sale proceeds the market value at March 1982 (or cost of acquisition, if later), costs incurred in improving the asset, an indexation allowance, and certain disposal costs.
So how can you reduce capital gains? Read on.
Rollover relief
Claim rollover relief if your company buys new chargeable business assets within one year before or three years after selling a business asset. This effectively postpones any tax liability until the new asset is sold. Special rules apply if the new asset is a wasting asset.
Negligible value claim
Claim relief on assets that have become worthless. A loss can be claimed even though the asset has not been sold, and this can then be offset against chargeable gains.
Crystallising capital losses
Assets that have fallen in value since March 1982 (or date of acquisition if later) could be sold, thereby crystallising capital losses to set against other chargeable gains. This is easily achieved if the asset is a quoted share or security.
Deferring capital gains
Capital gains are realised when an unconditional contract for the sale of an asset has been made. In the case of conditional contracts, the sale is regarded as taking place when the condition is satisfied. You can therefore use a conditional contract, or grant an option, to delay the gain until after the year end.
Do call us if you would like further help or advice on this subject. McDade Roberts Accountants deal with these Capital gains issues day in day out so we are just on the end of the phone if you need help. Call us on 01772 717110.