Q: I have a share portfolio and I’m feeling increasingly nervous that the markets are going to fall so I’m considering selling my shares and waiting until the markets stabilises before going back into the market. I know I will incur a Capital Gains Tax liability of approximately £25,000 but is there anything I can do to mitigate the CGT?
A: Capital Gains Tax is paid when you sell or dispose of assets such as personal possessions worth more than £6,000, property that is not your main home, shares or business assets. It’s important to note that capital gains tax is only due on the profit – the money you make minus the original cost. How much you pay will depend on the type of asset you’ve made a gain on and your tax band. The sale of some assets are free from tax, the CGT rate is different on property and everybody has a capital gains tax annual allowance for 2019/20 it is £12,000..
Here are our top 5 tips for reducing Capital Gains Tax:
A discussion with an independent financial adviser is essential to better understand whether selling shares fits with your long-term plan and to advise you on any potential capital gains tax that may be due.
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