Our 5-minute read – Tax Tips – for UK doctors and dentists will help you save tax, get organised with your tax affairs and make sure you meet important deadlines with ease.
This article does not constitute advice. Professional advice should be taken prior to acting on any part of it. The Financial Conduct Authority does not regulate tax advice.
Capital Gains Tax (CGT) is a tax payable on the sale of assets where a financial gain is made. Any gain above your annual tax-free CGT allowance, which this year is set at 12,000 (a £300 increase from £11,700 last year) you pay tax on.
However, there are allowances and exemptions that can be used to reduce your liability, and some are annual, so make sure you use them as you can’t roll over any unused portion to the next year.
The most common assets doctors and dentists end up paying CGT on are:
- the sale of property, and
- shares.
These are two assets that often see significant gains. Businesses mainly are affected by CGT, so practice owners often face dealing with CGT when they sell their practice.
CGT can also affect your personal tax situation — you’ll need to declare any capital gains on your personal tax return if you are employed but have a buy-to-let property.
CGT only applies to the profit made on an investment, so along with working out the total net profit, there are additional allowances that need to be part of the estimation. These calculations can get pretty involved, so it’s always best to consult a professional.
Exempt Assets
Not all assets are subject to CGT, and there are actually a number of assets that are exempt:
- Private motor cars, including vintage cars
- Gifts to UK registered charities
- Some government securities
- Personal belongings (aka ‘chattels’) where the sale proceeds are less than £6,000
- Prizes and betting winnings
- Cash
- Assets held in ISAs
- Foreign currency for your own use.
If you sell your main home there’s usually no need to worry about CGT, but there are certain stipulations and details that need to be in place and unfortunately, second homes or rental properties aren’t exempt.
Need help managing your tax liabilities? Speak to a financial adviser
Capital gains tax seems unavoidable for many taxpayers. But there’s good news because your overall CGT bill can often be significantly reduced as long as you know how to maximise certain reliefs and allowances. Get in touch with a financial adviser who can help ensure you’re taking advantage of all the ways to save tax this year.