Inheritance Tax & Capital Gains Tax
Tax & Capital
Unlocking Inheritance Tax (IHT) and Capital Gains Tax (CGT)
Understanding Inheritance Tax (IHT) and Capital Gains Tax (CGT) is pivotal in managing financial estates. At PKPI Chartered Accountants, we pride ourselves on empowering our clients with the knowledge to navigate these tax landscapes effectively.
Delving into IHT: A Guide through Inheritance Tax
IHT, often a concern for many, is imposed on an individual’s estate after their passing. To navigate this tax realm, it’s crucial to explore thresholds, exemptions, and reliefs.
Threshold Insights
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Mastering CGT: Decoding Capital Gains Tax
CGT triggers upon the sale or disposal of an asset, surpassing the tax-free allowance
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Exemptions and Reliefs
Within IHT, exemptions and reliefs play a crucial role. Reliefs like Business Property Relief (BPR) and Agricultural Property Relief (APR) act as superheroes, slashing tax liability on specific assets. Additionally, gifts made seven years before passing might escape taxation under specific conditions.
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Taxable Territory
CGT covers a wide array of assets, including properties (excluding primary residences), stocks, and high-value personal possessions.
Tax Planning Services
FAQs
1.What Is Capital Gains Tax?
Capital Gains Tax is a tax on the profit when you sell (or ‘dispose of’) something (an ‘asset’) that’s increased in value.
2.What is Inheritance Tax?
Inheritance Tax (IHT) is a tax on the estate of someone who has died, including all property, possessions and money.
3.What's included in the estate?
- Savings
- Possessions, including property
- Pension funds (some payments may be subject to tax)
- Value of gifts given within seven years before death, except for specific exemptions
- The initial £325,000 of the estate is tax-free; a 40% tax applies only to the amount exceeding this threshold.
4.How much is the UK Capital Gains Tax?
The following Capital Gains Tax rates apply:
- 18% and 28% tax rates for individuals (the tax rate you use depends on the total amount of your taxable income, so you need to work this out first)
- 28% for trustees or for personal representatives of someone who has died.
- 10% for gains qualifying for Entrepreneurs’ Relief.
