October 2024's Autumn Budget delivered a significant blow to investors with the announcement of increased Capital Gains Tax (CGT) rates. Today, we explore the new rates, how they will affect the sale of assets, and how investors can mitigate their effects.

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by Ali at Taxfile.

The UK Chancellor, Jeremy Hunt, delivered his Spring Budget on March 6, 2024, amidst a backdrop of subdued economic growth and limited fiscal headroom. The budget aimed to strike a delicate balance between supporting economic activity, controlling public spending, and preparing for future challenges.

If you have missed the announcements, the Key Highlights for the majority of our clients are as follows.

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by Mohamed at Taxfile.

Have you ever felt that you've paid more in taxes than necessary? Whether due to calculation errors, changes in personal circumstances, or evolving tax laws, overpayments can happen to anyone. The good news is that there's a way to reclaim those excess funds through the process of overpayment relief claims. In this comprehensive guide, we'll walk you through the ins and outs of reclaiming your hard-earned money.

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Welcome to Taxfile’s Autumn Newsletter for 2021. One of our biggest yet, it includes useful tax- and accountancy-related news that you need to be aware of, ways to save time or money – and much more. Take a look!

QR Codes

You’ll find QR codes throughout the newsletter. These are a quick and easy way to access further information about the topic. Assuming you are viewing the newsletter on a desktop device or a printed* version, simply point your mobile camera phone at a QR code and then open the link that pops up. Your mobile’s browser will then take you straight to the information page. Alternatively, we supply simple link URLs to simply tap in.

Download As an Acrobat PDF & Print Out

* If you're viewing on a small screen, it may be easier to read if you download the newsletter as an Acrobat PDF so you can print it out at full size (A4) ...

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New rules have now come into force in relation to capital gains made on disposals of UK residential property*. Several key actions are now required if a taxable capital gain has arisen, including some that now need to be made fast:

1. Taxpayers need to report the property's disposal within 30 days of the actual disposal;
2. They will need to pay the estimated Capital Gains Tax (‘CGT’) to HMRC within 30 days of the disposal.
3. Those who fill in and submit a Self-Assessment tax return will also need to include details of the disposal on their return.

Who Do the New CGT Rules Apply To?

The new rules apply whether you're an individual, joint property owner, trustee, partner in a partnership or LLP, or a personal representative.

What Counts as a Residential Property Disposal?

The new rules apply to all UK residential property that was disposed of (taken as the date of the exchange of contracts) since 6 April 2020 inclusive, where a capital gain was made that will require payment of CGT.

To fall within the rules, a UK residential property must be one that:

• is suitable for use as a dwelling, or;
• is being built or adapted for use as a dwelling.

It can be one in which the the owner has never lived or has lived for only part of the period they owned it. It can also be a rental property or a holiday home.

Where a property has been used for mixed purposes, only the capital gain that's equivalent to

The post New 30-Day Rules for Capital Gains on Residential Property appeared first on Taxfile.

According to HMRC, 'cryptoassets' are cryptographically secured digital representations of value or contractual rights that can be:

• transferred
• stored
• traded electronically

There are various types of cryptoassets including exchange tokens, utility tokens, and security tokens. HMRC does not consider cryptocurrency to be currency or money & their complete Cryptoassets Manual can be found HERE.

As far taxes are concerned, investing in cryptocurrency is akin to investing in other assets such as stocks, bonds, and the sale of rental properties. This means that capital gains and losses rules apply when you 'dispose' your assets, and in this case your cryptocurrency.

HMRC explains that disposals include:

• selling cryptocurrency for money
• exchanging cryptocurrency for a different type of cryptocurrency
• using cryptocurrency to pay for goods or services
• giving away cryptocurrency to another person

Any of the above situations subject any profits to Capital Gains Tax (CGT) and the simple formula for calculating capital gains (or losses) is:

Fair Market Value - Cost = Profit or Loss

The fair market value is the market price of the asset at the time that you sold, traded, or disposed of it. The cost is the price you paid at the time of the purchase.

Although this is a simple and logical calculation, calculating CGT on your profits becomes a bit more complex when you have multiple transactions to account for. The UK requires a specific type of method for calculating the cost basis of your coins known as Shared Pool Accounting also known as a 104 Pool.

With the shared pooled accounting method, you are essentially

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Owners of second properties and let properties need to be aware that HMRC is planning to introduce new rules from 6 April 2020 to require payment of Capital Gains Tax much, much earlier! The window of payment will be reduced from 31 January following the year of the gain to a mere 30 days from the date of the sale.

Effectively, ‘in year’ reporting of the estimated gains - and payment of the tax - is mandatory under the new rules. Failure to report the gains and pay the tax will lead to penalties for landlords and second home owners.

You will only be able to offset losses accrued at the time of the disposal, so losses later in the year will not be available against the payment on account.

Summing Up:

• If you make a capital gain in 2018/19 (before the new rules kick in) you will pay the capital gains tax on or by 31 January 2020.
• For the sale of a house that is let, or a second property, with exchange of contracts occurring on, say, 15 April 2020 with completion happening on 15 May 2020, the Capital Gains Tax (CGT) has to be paid by 14 June 2020. This accelerates the payment of the tax to the Exchequer by 7 months.
• So, perversely, the later year requires the Capital Gains Tax payment before the earlier year, as you can see above!

The other difficulty is knowing what rate to apply because a higher rate taxpayer has to pay 28% on a gain but a basic rate taxpayer has to pay tax at 18% up to the limit of the basic rate band that is unused. This is, of course, one situation where Taxfile can help to work out the tax implications for its customers. Tax calculations are what we do best and we're here to help you!

Note that Scottish tax rates may vary.

HMRC is currently assessing feedback on their consultation, which closed on 6 June 2018.

If you believe this change of rules is wrong, one option is to write to your MP to complain.

Professional Help with Tax & Accountancy - for Landlords & More

For help with accountancy and tax for any property, lettings or any capital gains situation you may find yourself in, contact your nearest branch of Taxfile. We have London offices in Tulse Hill, and Dulwich, in London SE21. Call 0208 761 8000 for an introductory chat or appointment, contact us here or click the bold links for more information. We'll be happy to help and to get your tax affairs in order.

The post Second Property & Rented Property ‘Tax Trap’ for the Unwary appeared first on Taxfile.

You can now get tax planning and tax advice from Taxfile. We have highly experienced senior accounting staff who can give you the right tax advice when you need it most — for example, when your circumstances are changing, if you've had trouble keeping on top of your tax commitments and need to bring things up to date, or perhaps a friend or relative simply needs a bit of reassurance with regard to their tax situation. Perhaps you have assets or income abroad as well as income in the UK and want to make sense of your tax position. Or, perhaps you have recently made a tidy profit trading crypto coins like Bitcoin and want to know where you are from the standpoint of Capital Gains or Income Tax. Maybe you need to disclose income from property rental that you have previously not told HMRC about (more about that in a later post). Those are all examples of typical situations where our new Professional Tax Advice and Tax Planning services can help you to see the wood from the trees.

A Free Telephone Consultation

In the first instance, we are inviting clients to speak for just 15 minutes with one of our resident tax planning experts. This will be in the form of a free, introductory telephone call, perhaps in February or March if it suits you. We can then see what's needed and take it from there. We can, of course, discuss any costs with you before you commit to anything further, and there is no obligation.

Whether it's about labour taxes, investment taxes, business taxes, disclosures to HMRC or even professional help to support you during an HMRC tax investigation, we can make sense of all the options for you and — in a fair and ethical way — help to make sure you are paying no more tax than you should do. With decades of experience in accountancy and tax planning, we know exactly what's what when it comes to tax, so can definitely help you. Call 0208 761 8000 to arrange your free 15 minute telephone appointment with a tax expert, at a mutually convenient time. Alternatively,

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