There is reported widespread under-use of the annual £11,700 capital gains allowance – a tax break that can be used as a tool to save thousands in tax bills.
Each year you can take some gains before being subject to capital gains tax – this year it’s £11,700. It is therefore worth planning when to take gains in order to stay below the threshold in any one year. Spouses also have an allowance, which means it’s possible to share assets and both take advantage. One thing to note is that selling a fund or share counts as a disposal for capital gains purposes. If investors want to buy back the same share, they have to wait 30 days, otherwise the sale does not count as a disposal. But investors can sell a fund or share and then immediately buy something else, even if it’s very similar. This allows investors to use the allowance without spending significant time out of the market.
Contact one of our advisers to see how you can ensure you use this allowance regularly.