Capital Gains Tax?

Question

I sold a business about 2 years ago & am due to pay the CGT on the gain by End Jan 08. I have not had any earnings since that time & lived on the money made from the sale. Everyone gets a tax free allowance on their earnings , so can I not use my allowance to offset the CGT bill as I have not been able to take advantage of this allowance?

Answer 1

no, unfortunately the personal allowance only relates to earnt income.

income from sale of assets such as a house or a business (i know sounds daft), isnt earnt income.

Capital Gains has its own annual tax free allowance each year which would of been applied when the gain was calculated and the tax is paid on the taxable amount.

the tax free allowance you are referring to is on a year by year basis. if you havent taken advantage of it, its is lost and cannot be rolled over.

edit ***
if you have earnt any interest on the money sitting in the bank, then I assume you would of paid some tax on that interest as normally interest is paid net of 20% tax.

the allowance you are referring to can be used to claim back this interest ( I know it wouldnt be a great deal but better than nothing) if you wanted too. you have to contact the inland revenue, you can find their phone numbers at www.hmrc.gov.uk and tell them what you want to do and they will send you the relevant forms etc..

Answer 2

The tax year during which you have to pay the tax is irrelevant - what matters is the tax year in which the gain arises i.e. in which you sold the business. Do you have any unused personal allowance for that tax year? Surely you had an accountant to calculate the gain and to advise on the selling price. What does he say?

Answer 3

No, I'm afraid not.

Personal allowances are only applied to income. The equivalent allowance for capital gains is the annual exempt amount which would have been £8,800 in your case and is more than the personal allowance.

You did claim this, I hope?

Answer 4

get a loan

Answer 5

No you can't.