Capital gains tax (CGT) is a tax on the profit you make when you sell or dispose of an asset that has increased in value. If you have made a capital gain in the last tax year, you must declare it and pay CGT on it.
Not declaring or paying what you owe is an offence that could land you with a fine, possibly leaving you to pay even more than you originally owed in interest.
If you are unable to pay your CGT bill, it is important to contact HMRC as soon as possible. HMRC may be able to offer you a payment plan, or you may be able to claim a relief or exemption from CGT.
There are a number of reliefs and conditions which, if you receive the right financial advice, may mean the amount of CGT you pay is lower.
If you are a UK resident, you may be able to claim the annual exempt amount. This is a tax-free allowance of £12,300 for the 2020/21 tax year. This means you will not have to pay CGT on any gains up to this amount.
You may also be able to claim Entrepreneurs’ Relief, which can reduce the rate of CGT you pay from 20% to 10%. This relief is available to those who have owned a business for at least 12 months and have made a gain on the sale of the business or shares in the business.
If you are a higher rate taxpayer, you may be able to claim a CGT discount of up to 20%. This means you will only pay CGT on 80% of your gains.
If you are unable to pay your CGT bill, it is important to contact HMRC as soon as possible. HMRC may be able to offer you a payment plan, or you may be able to claim a relief or exemption from CGT.
It is important to remember that the deadline for paying CGT is 31 January following the end of the tax year in which the gain was made. For example, if you made a gain in the 2020/21 tax year, the deadline for paying CGT is 31 January 2023.
If you are unable to pay your CGT bill on time, it is important to contact HMRC as soon as possible. HMRC may be able to offer you a payment plan, or you may be able to claim a relief or exemption from CGT.
In conclusion, if you are unable to pay your CGT bill, it is important to contact HMRC as soon as possible. There are a number of reliefs and conditions which, if you receive the right financial advice, may mean the amount of CGT you pay is lower. The deadline for paying CGT is 31 January 2023.