Understanding Capital Gains Tax: Why Professional Guidance Matters

When it comes to selling property, shares, or other investments, Capital Gains Tax (CGT) often becomes a concern only once a sale has taken place. Many business owners and individuals are caught off guard by how much they owe. At Mitchell Associates, we’ve been helping clients across South Wales manage their CGT affairs for more than 30 years, ensuring every calculation is accurate and every relief is applied correctly.

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What Is Capital Gains Tax?

Capital Gains Tax is charged on the profit made when you sell, gift, or dispose of an asset that has increased in value. It applies to assets such as second homes, investments, shares, and business interests.

The gain is usually calculated as the sale proceeds minus the original purchase cost and any qualifying improvement costs. Every individual receives an annual tax-free allowance, currently £3,000 for the 2025/26 tax year. Any gains above this amount are taxed at either 10% or 20% for most assets, depending on your income level.

For residential property disposals that do not qualify for Private Residence Relief, the rates are 18% for basic rate taxpayers and 24% for higher or additional rate taxpayers, following the reduction from 28% announced in the Spring Budget 2024.

Understanding how these figures apply to your circumstances can make a significant difference to your overall tax bill.

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Reliefs and Exemptions That Can Save You Money

Several reliefs can reduce or even eliminate your CGT liability. Our specialists regularly help clients make the most of the following:

• Private Residence Relief: No CGT is payable on the sale of your main home, provided it qualifies. We advise on how periods of absence or letting can affect eligibility.
• Business Asset Disposal Relief (Entrepreneurs’ Relief): If you sell a business or shares in your company and meet the qualifying conditions, you may pay a reduced CGT rate of 10% on gains up to the lifetime limit of £1 million.
• Gift Holdover Relief: When transferring business assets or shares to a family member or trust, CGT can be deferred until the recipient disposes of the asset.

Used correctly, these reliefs can lead to substantial tax savings.

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Reporting and Deadlines

Timing and reporting are critical when it comes to CGT. For example, any gain from selling a UK residential property must be reported and any tax due paid within 60 days of completion. Other disposals are generally reported through your annual Self Assessment tax return.

We handle the entire process for our clients, from preparing detailed calculations and identifying applicable reliefs to submitting accurate reports to HMRC on time.

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Considering the Bigger Picture

CGT doesn’t exist in isolation. It often interacts with other taxes such as Income Tax, Inheritance Tax, and Stamp Duty. The timing and structure of your transaction can have wider financial implications. We take an integrated approach to ensure your decisions are made with your full tax position in mind.

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How to Reduce Your Capital Gains Tax Bill

Reducing CGT is not about avoidance schemes. It’s about using allowances wisely, structuring ownership effectively, and planning ahead. Common strategies include:

• Spreading disposals across multiple tax years to make full use of the annual exemption
• Offsetting capital losses against gains
• Transferring assets between spouses or civil partners to maximise both allowances

These simple but effective steps can make a real difference when planned early.

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Why Choose Mitchell Associates

Selling a property, business, or long-term investment is often one of the most significant financial events you’ll face. Having an experienced accountant guide you through the process ensures you stay compliant while keeping more of what you’ve earned.

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At Mitchell Associates, our team combines more than 30 years of experience with a practical, jargon-free approach. We handle every aspect of your CGT obligations, from planning to filing, and ensure that all available reliefs are properly claimed.

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If you’re considering selling or transferring an asset, get in touch with our tax specialists today. We’ll help you plan ahead, minimise liabilities, and manage your Capital Gains Tax position with complete confidence.