When are you not taxed on capital gains?
You immediately become eligible for capital gains tax when you sell something for more than you bought it for, otherwise known as making a gain or, more commonly, a profit. But there are certain situations where it is not charged at all.
Firstly, to be clear on capital gains tax, it’s not actually the amount you receive that is taxed, rather the specific gain made on the item or asset in question. This is the tax payment that is reduced to a lower rate if you quality for Entrepreneurs’ Relief, or a payment that sometimes doesn’t apply at all.
The following situations are examples where capital gains tax is exempt and therefore tax-free:
- Gifts to charities (although tax will be taken for a charity asset sold for a profit or less than the market value).
- Profit from the sale of a person’s main home.
- Private cars.
- Betting or lottery winnings.
- Personal belongings worth less than £6,000.
- Gifts between spouses or registered civil partners (although this is exempt if the couple are separated, have not lived together for the last tax year, or will be selling on the gift as part of their business for profit).
- ISAs, New ISAs (NISAs), pensions and trust funds.
- First hand profits from insurance policies (policies bought second hand will be taxed).
- The estate of an individual who has passed away.
If you’re unsure about why you are paying capital gains tax as an entrepreneur, get in touch with Financial Saviour today and you may find that Corporate Recovery is the answer you were looking for. Give us a call, drop us an email or fill out our online enquiry form and we will fully assess your individual situation.