Capital Gains Tax (CGT)

Capital gains tax (CGT) is a tax on capital "gains". If when you sell or give away an asset it has increased in value, you may be taxable on the profit. This does not apply when you sell personal belongings worth £6000 or less.

You might have to pay capital gains tax if you:

• sell, give away, exchange or dispose of an assest or part of an asset.

• receive money from an asset-for example compensation for a damaged asset.

You do not have to pay capital gains tax on:

• your car

• your main home

•personal belongings sold for less than £6000 like furniture, paintings

• bettings, pools or lottery winnings

• ISAs, VCTs.

There are a few ways of cutting your CGT bill:

•if you are married or in a civil partnership and living together you can transfer assets to your husband, wife or civil partner without having to pay CGT
•you can't give assets to your children or others or sell them assets cheaply without having to consider CGT
•if you make a loss you may be able to make a claim for that loss and deduct it from other gains, but only if the asset normally attracts CGT - for example you cannot set a loss on selling your car against gains from disposing of other assets
•if someone dies and leaves their belongings to their beneficiaries, there is no CGT to pay at that time - however if an asset is later disposed of by a beneficiary, any CGT they may have to pay will be based on the difference between the market value at the time of death and the value at the time of disposal.

If you are still confused about the way CGT works, Taxfile in South London and Exeter can help you understand it better giving you the right advice at the right price.

Tax Enquiry Nightmare Gets Worse

If you are unlucky enough to be the subject of a tax enquiry by the tax man, it could now be an even worse nightmare for you than ever before. HMRC has recently introduced a new bonus scheme for the tax inspectors who conduct the enquiries, which means they have a vested interest in coming down hard on ordinary folk and negotiating far less. The more tax they find you need to pay - in their opinion - the more they will earn.

The average extra tax they are demanding in recent enquiries now averages a worrying £7,778 for each self-assessment enquiry it undertakes - that's a steep jump of £3,251 extra on last year's average. The new statistics also show that the amount of extra tax generated just from the band of those earning more than £200k per year has risen to £197 million which is a 150% increase on the preceding year. Clearly those bonuses are having the desired affect on the individual tax inspectors who appear to be squeezing every last penny from each of the enquiries they are undertaking.

It's times like these when services of tax advisers like TaxFile really come into their own. Because they know the rules (and any allowable expenses) as well as the tax inspectors do, they level the playing field for ordinary hard-working people and can argue the case on your behalf. For a low fixed fee the whole headache can be taken over by an accounting professional who is on your side. Taxfile have offices in South London and in Exeter, Devon. Telephone 0208 761 8000 for further information.