Capital Gains Tax 2010

Capital Gains Tax 2010

by Ashley Clark, Director - March 2010

CAPITAL GAINS TAX - Planning

The main planning points to remember in connection with the annual CGT exemption are:-

· The annual exemption for individuals is £10,100 for 2009/10 (and £5,050 for most trustees). The annual exemption cannot be carried forward. If an individual has investments with inherent gains he/she should consider making disposals to realise any gains within the annual exemption. To ensure gains are properly realised the disposer must not personally reacquire the same shares within 30 days of disposal.

· The annual exemption is available to each of a married couple and so, between them, capital gains of up to £20,200 in tax year 2009/10 can be realised without any CGT liability. Transfers between spouses living together are on a “no gain/no loss” basis so, provided any transfer is outright and unconditional, a prior transfer to a spouse could effectively double the potential use of the annual exemption. Since a flat rate of tax of 18% has been introduced the only advantage of such transfers is to use the annual CGT exemption of the transferee spouse.

· In all CGT planning careful thought needs to be given to the possibility of a future increase in the rate of CGT payable.