Understanding Capital Gains Tax: it's the tax on the profit you make when you sell something that has increased in value. But don't worry, it's not the full amount of money you receive that's taxed - only the gain you've made. For instance, if you sold an asset for £25,000 that you bought for £5,000, your gain would be £20,000 and that's what would be taxed.
This tax is levied on the gain you make and not the amount of money you receive. However, some assets are exempt from this tax, and you don't need to pay if your gains in a year are under your tax-free allowance.
On April 1st, 2023, corporations with profits exceeding 250k saw an increase in their tax rate from 19% to 25%. However, for small profit organizations with profits below 50k, the tax rate remained at 19%. And those in between these thresholds saw a marginal rate of 26.5%.
One of our frequently asked questions around this topic is How does a large capital gain impact your company's tax liabilities when it straddles financial years? The rules require that the accounting period is split between the two financial years. The profits and capital gains of the entire period must be apportioned between those periods falling in each year.
Want to learn more about how to navigate Capital Gains Tax? Reach out to us for expert guidance.
