Do you own a property? If yes, are you paying capital gains tax? In case, you are not aware about the capital gains tax, it’s simple to understand. Any gains, you made on the disposal of an asset(s), you are liable to pay taxes on the profit. Every kind of capital gain is considered as a part of your income. So, if you’re paying tax at the rate of 30 percent, you would also need to pay capital gains at the same rate. If you are getting disheartened with the high capital gains tax, you actually don’t need to be as there are several deductible expenses, allowances and tax relief options are available that you can make use of.
Capital gains tax is paid by trustees, individuals or personal representatives. Are thinking why companies don’t pay capital gains tax? Companies do pay equivalent amount of tax. However, it comes under corporation tax which is known as chargeable gains. If you are liable to pay capital gains tax, you should not forget to declare it in your self assessment tax return. In case, you cannot complete the self assessment form, then you should notify the Inland Revenue before the due date and you will get the information about the last date by which you would need to pay the amount due to the Inland Revenue.
You can avail several exemptions and allowances. For capital gains on your main residence, you don’t need to pay any kind of capital gains tax. However, there are few eligibilities that you would need to meet to avail this particular deduction. First of all the property needs to be your permanent residence and the periods of absence need not to exceed three years. If you have more than one property then you should make a wise decision by selecting the property as your permanent which could provide you the maximum benefits in terms of tax savings. If you are married, as a couple you cannot have more than one permanent residence. You should be permanently separated or under a court order.
If you have rented out your permanent residence on some occasions or your main residence was not your permanent residence for some reason, then the calculation will be done on the basis of months the home was not your permanent residence. If you have rented out your property, you are liable to pay capital gains tax on the money you are earning from your property. But you can reduce the amount considering the interest on mortgage amount you are paying to the bank or the lender. You can also make use of the fact transfer of assets between husband and wife is completely tax free. Therefore, you can transfer the asserts to the one who is paying lesser amount of taxes.