Capital gains tax and rates

integro Contractor Tax

What is capital gains tax?

Capital gains tax is the tax that you pay on a gain or profit made by disposing of an asset. It is not the money received when selling an asset that is taxed but the gain that you have made whilst you owned it. So if an asset were bought for £10,000 and you sold it 3 years later for £12,000, the gain would be £2,000.

What assets do capital gains tax apply to?

Capital gains tax applies to the majority of assets. However, some assets are exempt such as your car, personal assets of £6,000 or under, and your main home will usually be exempt from capital gains tax too.

What counts as a disposal?

Gains arise on disposal, not just selling, so you can become subject to capital gains tax in a number of scenarios that you may not expect. For example: gifts to other people; selling inherited assets; transfer of assets on divorce, depending on the date that the transfer is made and whether you are still living together, are all disposals for capital gains purposes and will be subject to capital gains tax.
Making a gift of an asset to a spouse, civil partner or charity will not ordinarily lead to a capital gains tax liability.

What are the capital gains tax rates?

The rates and allowances for capital gains tax are as follows:

2015/2016 2014/2015
Basic rate tax payers 18% 18%
Higher rate tax payers 28% 28%
Effective rate after Entrepreneurs’ relief 10% 10%
Annual capital gains tax free allowance £11,100 £11,000
Lifetime allowance for Entrepreneurs’ relief * £10 million £10 million

*More information on Entrepreneurs’ relief can be found here: What is Entrepreneurs’ relief?

Why Integro Accounting?

Integro Accounting is the UK’s only specialist provider of fixed fee, limited company accountancy services for contractors, consultants and freelancers that was established to an award winning standard – our Practice Manager, Maria Hickmott FCCA, won The British Accountancy Awards’ ‘Accountant of the Year’ in 2011.

We were set up with the vision of providing a service that is the ultimate for the dynamic, busy professional of today in a language you understand.

Integro Accounting have designed a bespoke service for the contractor who is always on the go; never forgetting that one size will never fit all.

The relationship you have with your accountant is the most important factor in our service which is why we will always offer unlimited contact with your own personal accountant; whether that contact is via the phone, email or face to face.

We have our 3 offices located in London, the South-West and on the Bedfordshire and Buckinghamshire border. There are also meeting locations in many of the major cities and towns across the Home counties, South-West and South Wales, all conveniently placed so that you never have to travel far to meet your accountant.

If you have any questions about contracting or would like to find out more about how Integro Accounting can help you and business please call Christian on 01525 303984, email christian@integroaccounting.com or request a callback.