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As an expat in Singapore, Capital Gains Tax (CGT) is charged when you sell or gift an asset, such as a property or shares. Annual exemptions are available, but generally CGT is calculated based on the tax year and your total income. It’s worth remembering that you don’t have to pay Capital Gains Tax on your main home, but if you have more than one residential property you may find yourself more exposed. CGT ALLOWANCEThere is an annual CGT allowance, which currently stands at £12,300. Any profit made from assets which you sell under this value won’t attract CGT. Anything over this allowance will be subject to CGT. The current rates for CGT vary depending on your Income Tax rate. For example, those who pay higher rate Income Tax will pay 28% CGT on any profits made from residential property and 20% on any other assets. If you pay basic rate Income Tax, the rate of CGT you pay will depend on the size of the profit but will rarely exceed 18%. Careful planning can help you take advantage of the various tax reliefs available. READ MORE If you are considering your exposure to CGT it’s important to understand what liabilities you have. What tax rate do you normally pay? Are your profits under the annual allowance? Are the assets you have sold liable to CGT? Do remember that you have that annual tax-free allowance on profits from assets. It is possible to split any profits across two tax years to help reduce your CGT tax bill.
Another option is to transfer any gains to your spouse or partner to reduce your liability. Any planning will need the advice of an expert to ensure your affairs are arranged properly. If you are a higher rate taxpayer you are likely to be more at risk of paying significant sums in CGT. While there have been reductions from rates of the past (as much as 40% in some cases) you may still face up to 28% CGT on profits from the assets you sell. Again, careful planning can help
reduce your exposure. There are a number of allowances and reliefs available, which can help reduce or eliminate your CGT tax bill. Exclusively for business assets, rollover relief can be claimed when the profits from the sale of business assets are used wholly or in part to fund the purchase of new assets. This means that you would not be liable for CGT until the new
asset or assets are sold for profit. There are some conditions to this relief. You must buy the new assets within three years of selling the old ones and your business must be actively trading to be eligible. The Seed Enterprise Investment Scheme, or SEIS, was introduced by HMRC in 2012 to help early-stage companies raise funds through investors. A series of tax reliefs
were introduced on investments made to companies that qualify for the criteria. CGT relief is available when profits realised within three years are re-invested into the Seed Enterprise Investment Scheme. There are some complexities to accessing this relief including your tax rate, so it’s always advisable to consult a specialist. Similar to the SEIS, the Enterprise Investment Scheme, or EIS, was
created to help companies raise money to grow their businesses by offering tax reliefs to investors who buy shares in a company. There are a number of reliefs associated with EIS, all of which are dependent on the state of the company in question. Again, it is advisable to discuss your plans with an expert before applying. Now known as Business Asset Disposal Relief, Entrepreneurs Relief, or ER, allows relief
or reduction of CGT liabilities when part or all of your business is sold. Essentially, you will only be required to pay 10% CGT on profits from qualifying assets. These assets include, but are not limited to, the sale of all or part of your business and the sale of shares where you have at least 5% of share capital. Your eligibility for Entrepreneurs Relief is dependent on the type of assets sold for profit. It is vital that you seek advice from a
specialist, who will be able to guide you through ER in more detail. OTHER CGT PLANNING CONSIDERATIONSAside from reliefs, there are other factors that you must consider when considering your CGT obligations. TAX RESIDENCEBefore 2015, UK non-residents didn’t need to pay CGT on any profits from assets. However, this has now changed. Even if you aren’t resident in the UK for tax purposes, you will need to pay CGT if you sell a residential property in the UK. If you have assets (perhaps a home or investments) which you have established whilst overseas it may be useful to sell or gift them whilst you are still non-resident to avoid CGT. The length of time you have spent abroad may also impact your exposure to CGT. USING FULL ANNUAL EXEMPTIONYourannual CGT exemption allowance can’t be carried forward so you should try and use as much as you can each year. FOR MORE INFORMATIONOur team of tax planning specialists have many years of experience in dealing with CGT. This complex subject can be very difficult to manage and organise on your own, and we can help ensure you are making use of the reliefs and exemptions available. To discuss your circumstances please get in touch with your nearest office. All you need to know about Capital Gains TaxWhat is Capital Gains Tax? Capital Gains Tax is the tax on profit made from selling (or ‘disposing of’) an asset that’s increased in value. What is the Capital Gains Tax rate? Depending on your Income Tax band, you will pay a minimum of 10% on your gains, and a minimum of 18% on residential property. These tax rates can increase up to 20% on your gains, and 28% on residential property. When does Capital Gains Tax apply? Capital Gains Tax applies when you sell or dispose of most assets including
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Cheltenham Pure Offices, Cheltenham Office Park, – View on Google Maps 8 Dedicated offices worldwide providing financial advice across the globeContact Related articles…REGULAR NEWSNEWSLETTER SIGN UP"*" indicates required fields When should capital gains be paid?You should generally pay the capital gains tax you expect to owe before the due date for payments that apply to the quarter of the sale. The quarterly due dates are April 15 for the first quarter, June 15 for second quarter, September 15 for third quarter and January 15 of the following year for the fourth quarter.
How do you get capital gains tax on real estate?6 Strategies to Defer and/or Reduce Your Capital Gains Tax When You Sell Real Estate. Wait at least one year before selling a property. ... . Leverage the IRS' Primary Residence Exclusion. ... . Sell your property when your income is low. ... . Take advantage of a 1031 Exchange. ... . Keep records of home improvement and selling expenses.. |