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Year End Tax Planning 2021/22

As a new tax year approaches, it is important to ensure you are in the best financial position to help protect and grow your future wealth.

Our Bitesize Tax Planning provides you with details of the key allowances and reliefs available to you. The tax planning tips are available in easy to consider sections.

This article looks at Capital Gains Tax (CGT).

What options are available to you?

Everyone has a Capital Gains Tax free allowance of £12,300 in 2021/22 (£6,150 for most trusts):

  • Do you have any assets that could be sold before the 6 April 2022? If you haven’t already realised gains of this amount.
  • Have you used up your allowance? If you have, you could consider deferring selling assets until the next tax year.
  • If your spouse is a basic rate income taxpayer, gains on assets transferred to them will only attract tax at the lower 10% CGT rate (with the exception of residential property at 18%) to the extent of the unused income tax basic rate band.

Do you have substantial investments? You should seek advice to understand if it is possible to restructure these. This is so that they produce either a tax-free return, or a return of capital taxed at a maximum of only 20% under CGT, rather than income tax at up to 45%.

If you realise capital gains and losses in the same tax year, the losses are offset against the gains before the capital gains tax exempt amount is deducted. Capital losses will be wasted if gains would otherwise be covered by your exempt amount. Consider postponing a sale that will generate a loss until the following tax year. Alternatively, you can realise more gains in the current year.

For more information or to discuss any of the issues raised in this article, please contact your adviser, or call us directly on 0161 819 1131. Further information can also be found at gov.uk

See the other topics in our Bitesize Tax Planning series:

Personal circumstances differ and not all of this information is applicable to every client and/or their business, this information is general in nature and should not be relied upon without seeking specific professional financial advice.

The financial conduct authority does not regulate tax advice, estate planning or will writing.

The content in this article is for your general information and use only and is not intended to address your particular requirements. Articles should not be relied upon in their entirety and shall not be deemed to be, or constitute, advice. Although endeavours have been made to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No individual or company should act upon such information without receiving appropriate professional advice after a thorough examination of their particular situation. We cannot accept responsibility for any loss as a result of acts or omissions taken in respect of any articles.

Thresholds, percentage rates and tax legislation may change in subsequent finance acts. Levels and bases of, and reliefs from, taxation are subject to change and their value depends on the individual circumstances of the investor. The value of your investments can go down as well as up and you may get back less than you invested. Past performance is not a reliable indicator of future results.

Pareto Financial Planning Ltd is authorised and regulated by the Financial Conduct Authority.