Friday 29 October 2010
Wednesday 13 October 2010
Capital gain tax:
Capital Gains Tax has a long history with which I will not bore you suffice to say that there are moves afoot to align its rate with income tax. The Coalition put up the rate of tax from 18% to 28% (the Labour Party increased from 10% to 18%) and wants to reduce drastically the annual exemption currently at £10,100 to £2,000 which will mean an increase of tax take to £8,100 x 20% (marginal rate of tax for a basic rate tax payer) = £1,620.
Currently, each individual would receive £200,000(approx.) /4 = £50,,000 less tax of ((£50,000 - £10,100)*20%) £7,980 = £42,020.
A change in the law with a reduction of the annual exemption to £2,000 leads to each individual receiving:
£50, 000 less tax ((£50,000-£2,000) x 20%) = £9,600 = £40,400.
Therefore selling before the reduction in capital gains tax exemption would mean that each sibling receives £42,020 less £40,400 = £1,620 less which equates to the figure above.
Therefore the message is sell sooner rather than later.
Sales of properties must be proportionately reported on each personal tax return form because there is a tax take to HMRC (solicitors report the sale of all properties to HMRC by law and there is now always a charge of approx.£35.25 on each completion document.)
As a family I would be delighted to complete this task for each of them.
My regards,
David Barry
davidbarryaccountants@ntlworld.com
email: davidbarryaccountants@ntlworld.com
020 82527018/07877671423
Capital Gains Tax has a long history with which I will not bore you suffice to say that there are moves afoot to align its rate with income tax. The Coalition put up the rate of tax from 18% to 28% (the Labour Party increased from 10% to 18%) and wants to reduce drastically the annual exemption currently at £10,100 to £2,000 which will mean an increase of tax take to £8,100 x 20% (marginal rate of tax for a basic rate tax payer) = £1,620.
Currently, each individual would receive £200,000(approx.) /4 = £50,,000 less tax of ((£50,000 - £10,100)*20%) £7,980 = £42,020.
A change in the law with a reduction of the annual exemption to £2,000 leads to each individual receiving:
£50, 000 less tax ((£50,000-£2,000) x 20%) = £9,600 = £40,400.
Therefore selling before the reduction in capital gains tax exemption would mean that each sibling receives £42,020 less £40,400 = £1,620 less which equates to the figure above.
Therefore the message is sell sooner rather than later.
Sales of properties must be proportionately reported on each personal tax return form because there is a tax take to HMRC (solicitors report the sale of all properties to HMRC by law and there is now always a charge of approx.£35.25 on each completion document.)
As a family I would be delighted to complete this task for each of them.
My regards,
David Barry
davidbarryaccountants@ntlworld.com
email: davidbarryaccountants@ntlworld.com
020 82527018/07877671423
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