Capital Gains Tax (“CGT”) is what was once referred to as a ‘stealth tax’. People often know very little about it until they learn that it might be a problem for them.
CGT is basically a tax on an asset that you hold having increased significantly in value when you sell it. It can soon become a problem for Buy to Let landlords, as if the property they buy goes up significantly in value and they then sell it, it can trigger some CGT being due, seriously eating into the profit made.
There are numerous steps that individuals can take to minimise, or even totally alleviate the problem of CGT however. For example if the Buy to Let Landlord is married the property could be assigned into joint names with his or her spouse before sale to obtain the benefit of two allowances from CGT.
We are also increasingly being called upon to advise upon the effects of CGT on land, as if land is able to obtain planning permission it can suddenly go from being worth merely agricultural value, or being a nice big garden, to being worth a significant amount. Again, there are often steps that can be taken to massively reduce the CGT liability in this type of situation, and it is therefore important that you seek good advice early into any transactions, as if you put it off until after you have been granted planning permission, or sold the land, it may be too late to make the maximum possible savings.
As this is such a complicated area of law we always encourage any clients who may be affected by Capital Gains Tax to contact us to arrange a meeting to discuss their personal circumstances and the options available to them.