There’s a raft of different tax breaks on offer in the UK, but a few are often overlooked by savers and investors. Using them correctly means you can reduce your tax bill and keep as much of your investment returns as possible. Here is a guide to some of the possible tips and tricks you could use (but speak to a financial adviser for proper tax planning advice).
In 2011, my civil partner inherited his mother’s house, which had a probate value of £89,000. In December 2018, we transferred the house into joint ownership between my partner and me, using a solicitor. We have just sold the property for £125,000. The house was rented between being inherited and being sold. We spent about £3,000 on central heating and electric upgrades when we acquired it.
My mother is 89 years old. If she gives away money from her pension regularly without it affecting her standard of living, how will it affect her inheritance tax allowance? Will her nil-rate band be reduced?
My brother and I own equal shares in a house valued at £120,000 that we need to sell soon. The original cost was approximately £60,000. It is registered in our two names only. For capital gains purposes, are we able to use each of our wives’ £12,000 allowance as well as our own to minimise the impact of capital gains tax, or would we have to register our wives as co-owners to be able to do this?
Allan Johnston, by email
I have a discretionary trust that has run for almost seven years. Soon it will pass out of my estate into the estates of three trustees, my daughters. If they sell the property in the trust, they will be liable for capital gains tax. One of them lives in Australia and does not pay UK tax. Assuming the estate is divided equally, a third to each, there would be capital gains tax due to HMRC on two-thirds of it. But how would my daughter in Australia be treated?
Peter Abbott, by email
I have a buy-to-let flat that will trigger a big capital gains tax bill if I sell it. Can I pass ownership in tranches to my daughter (10% a year) so that the gain on each tranche is within the CGT annual exemption. If I live for seven years after the final transfer, I assume there would also be no IHT to pay. The flat has no mortgage. The only downside I see is the legal fees for each transfer.
Eddie Montreaux, Brighton
When our child was born, we set up a designated investment through Witan. Now he is approaching 18, we will shortly be transferring this investment across to him. Could you advise whether my partner or I need to declare anything on our tax returns when this is transferred, or will it all fall into his allowance for CGT?
David Griffiths, by email
Capital gains tax is scooping up more taxpayers in its net. Ceri Jones explains how investors can minimise their exposure.
The government has announced that two tax-free allowances will rise in line with the Consumer Prices Index rate of inflation, rather than the more generous Retail Prices Index rate.
Capital gains tax (CGT) will jump from 18 per cent to 28 per cent for higher-rate taxpayers at midnight tonight.