Capital gains tax applies to the disposal of an asset. An asset can be a property, land, stocks and shares, a painting and many other items. The tax is calculated on the difference between the sale proceeds and the cost. The net gain arising is taxed at 10% for individuals who are basic rate tax payers and 20% for individuals who are higher rate tax payers. For disposal of residential properties that do not qualify as a main residence the rates applied are 18% for basic rate tax payers and 28% for higher rate tax payers.
There are a number of exemptions available which can dramatically alter the picture and reduce the tax liability. The application of this tax on properties, in particular second and let properties, can give rise to substantial capital gains tax liabilities which, with careful planning, can be materially reduced. Obtaining advice as early as possible will give us the opportunity to review the options available to mitigate the tax.