What does Capital Gains Tax have to do with the end of the tax year?

Approaching the end of the tax year (April 5th), presents an opportune moment to evaluate your financial strategies to ensure you are making the most of your available allowances and exemptions. One aspect to consider is Capital Gains Tax (CGT) and its implications for your investments. 

What is Capital Gains Tax (CGT)?

CGT is a tax levied on the profit gained from the sale or disposal of certain assets, such as property (excluding your main residence), shares and other investments. It is important to understand how CGT works and its impact on your finances.

Why does CGT matter at the end of the tax year?

Each individual is entitled to an annualised tax-free allowance on capital gains known as the CGT allowance. For the tax year 2023/24, this allowance stands at £6,000 and is scheduled to reduce to £3,000 for the tax year 2024/25. By strategically timing asset sales, you can potentially take advantage of this allowance to help mitigate a CGT liability.

Can I offset my gains against losses?

Taxpayers can potentially offset capital gains with capital losses realised during the same tax year or carried forward from the previous 4 tax years. 

Contact Dentons Wealth to schedule a consultation and discover how we can support you in optimising your tax efficiency and achieving your financial goals.