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Please fill in your details to arrange a financial review with one of our financial planning or investment experts.
How it works:
- We will call you back to find out more about your aims and requirements
- We will arrange a meeting with one of our team at a convenient time, either over the phone, on video, at your home or workplace, or at one of our offices
- You will be able to ask any questions you have and find out more about managing your wealth with Saltus
- Your review will be at our cost and there is no obligation to work with us afterwards
Who we work with:
- Individuals with £250,000 or more in investable assets
- High earners with £100,000 or more to invest and able to reach £250,000 within five years
Any profit you make from selling an asset could be subject to capital gains tax (CGT). This could be as much as 28%, so it’s important you are aware of how CGT could affect you and factor it into your calculations when making investment decisions.
When is capital gains tax applied?
Capital gains tax is applied to any profit when you sell or dispose of almost any asset that is worth in excess of £6,000. There are a few exemptions such as when you sell your car or gift an asset to your spouse or civil partner. In addition, there are several tax-free vehicles you can hold assets in, such as ISAs, pensions and offshore bonds, where CGT is not applied. Using a diverse range of CGT free tax wrappers effectively is key if you might be affected by CGT.
How much is UK capital gains tax for 2022/23?
Basic rate taxpayers will have to pay 10% in capital gains tax for any gains that they crystallise and higher rate taxpayers are required to pay 20%.
So, if you purchase shares in a general investment account for £10,000 and sell them for £30,000, you will have made a gain of £20,000. If you are a basic rate taxpayer, £2,000 will be levied in CGT and £4,000 will be applied for a higher rate taxpayer.
What is the annual capital gains tax allowance?
Luckily, there is a helpful ‘annual allowance’ provided by the UK government. Any individual can make up to £12,300 in realised gains in a single tax year. As long as no gains were made elsewhere, the £20,000 gain in the previous example could therefore be reduced to £7,700, and only £770 and £1,540 would be levied for basic rate and higher taxpayers respectively.
How to reduce the capital gains tax you pay
Using your annual CGT allowance effectively can be a key component of sophisticated financial planning. If you have investments held within a taxable account, a high-quality financial planner will look to make disposals on an annual basis to make use of your annual allowance and continually reduce the gains within your portfolio. They typically subscribe the sale proceeds to an ISA or re-invest the them into a very similar investment fund before returning them to the original investments after 30 days have passed. As I am sure you can gather, this is not a straight forward process, so it’s best to leave it to the professionals if you aren’t confident in how to achieve this.
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How much capital gains tax do you pay on property?
One asset where it’s more challenging to make use of your annual CGT allowance is property. Unfortunately, you can’t sell portions of a property in the same way you can an investment portfolio, so gains can build up on buy-to-lets. Fortunately, CGT is not applied to your primary residence but there is an additional 8% rate applied to any other properties you own. This means 18% and 28% is levied for basic rate and higher rate taxpayers respectively when they sell a second property. This is a significant sum and there is little you can do to avoid it, which can often make investing a more attractive option.
One of the few ways you can avoid paying CGT on a second home, or in fact on any asset, is by offsetting losses made on other disposals against the gain you have realised. This doesn’t have to be in the same tax year either, as losses can be carried forward for up to four years from the point at which you made the disposal.
Capital gains tax can have a significant impact on your potential profits, so having a clear understanding of how and when it is applied is key to effective financial planning. It’s also important to ensure you are active in managing it, particularly when considering your investments. Managing CGT effectively can be reasonably complex so, as always, do take advice if it’s an area that is significantly impacting you.
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Saltus Financial Planning Ltd is authorised and regulated by the financial conduct authority. Information is correct to the best of our understanding as at the date of publication. Nothing within this content is intended as, or can be relied upon, as financial advice. Capital is at risk. You may get back less than you invested.
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Financial planning can help you reach your goals in life, whether you want to determine when you can retire comfortably, bring organisation to your financial world or pass on your wealth effectively.
Pensions and retirement planning
Deciding when to retire is a challenging decision and can feel like a leap of faith. At Saltus, we gather information on all of your existing assets and then use our technology and expertise to show you exactly how to achieve the retirement you’re after.
Reducing your tax burden
How to structure your wealth and access income should be approached in a sophisticated way. A detailed financial plan may use pensions, ISAs, general investment accounts, offshore bonds and other tax wrappers to ensure you can draw your money in a tax-efficient manner.
Consolidating your wealth
Holding multiple investment accounts and pensions can mean they’re hard to keep track of and administer. We’ll help you overcome this by consolidating your accounts into a single plan so that you can understand your financial position with ease.
Protecting you and your assets
We protect our cars and houses without much thought yet you might be the most valuable asset in your family. Whatever your situation, we can provide advice to ensure you have the right level of insurance in place to keep your finances protected.
Passing on your wealth
Estate planning is more important than just having a Will. We’ll work closely with you to understand how estate planning, which has emotional as well as financial consequences, can impact your overall financial plan.
Significant life events
Significant life events can present great opportunities but also considerable challenges. Whether you are going through a business sale, divorce or are receiving a lump sum, we’ll help build a financial plan to meet your changing lifestyle.