Uk Capital Gains Tax – What You Need To Know To Avoid It!

What is CGT?

Capital gains tax (‘CGT’) is the tax that you pay when you sell an asset. So if you sell property, or an investment you’ll need to consider CGT. In fact anything that you don’t hold for the purposes of a trade (ie that you’ve not bought to sell) will be within the scope of CGT.

Any gain that you make is then taxed depending on the rate of income tax that you pay. So if you’re a 40% taxpayer you’ll pay CGT on the gain at 40%. If you are a basic rate taxpayer you’ll pay CGT at 20% on the gain within your remaining basic rate tax band, and 40% on the excess.

OK – this is pretty straightforward, but based on the above the scope of CGT is huge! (as it covers any objects that you didn’t purchase to sell on). Well, this is correct it does have a very wide scope but the interesting bit is that there are lots of exemptions that take assets out of the scope of CGT. We’ll have a quick look at these so you can see what you can sell without having to account for CGT.

The exemptions from Capital Gains Tax

Your own Home

As most of you will probably know, an investment in your own home is free of capital gains tax, (and income tax as well for that matter).

Chattels which are wasting assets

There is a blanket capital gains tax exemption for ‘tangible moveable property’ that is also classed as a wasting asset.

In general terms if an asset has a predictable life of less than fifty years it is exempt from capital gains tax. An item of machinery is regarded as having a predictable life of less than fifty years and therefore they will usually be a wasting asset.

Therefore many assets that have an element of machinery should in principle be exempt (for example antique clocks and watches)

Gambling winnings

Anything you make from Gambling is received totally tax free. So there’s no capital gains tax, and there will not also be any income tax or national insurance due

Personal compensation or damages

Most forms of compensation will be exempt from capital gains tax

Motor cars

There is a capital gains tax exemption for ‘normal motor cars’

Debts

There is an exemption under capital gains tax for a disposal of a debt by the original creditor

Chattels worth less than £6,000

Even if you have tangible moveable property that does not qualify as ‘wasting’ assets there should be a capital gains tax exemption available if the proceeds are under £6,000.

The annual capital gains tax exemption

It’s also well worth noting that everybody has an annual capital gains tax exemption (currently £9,200) that is available to cover capital gains. So if your gain is less than this there’s no capital gains tax to pay in any event (this means that a couple could purchase an asset jointly and later sell it eliminating profits of £18,400 due to the two annual exemptions).

This should give you a few pointers on which assets you can sell without incurring capital gains tax. We cover all of these and more in detail via our website http://www.wealthprotectionreport.co.uk

How to Avoid Major Losses in Equity Investing?

It is quite easy to fall prey to market fluctuations and make unprecedented losses in investment. Wealth building is important for everybody; it is not enough if we have sufficient money today, the future counts as well. Investing in the equity market is perhaps one of the most lucrative ways of going about this. It is a fact that there are several avenues of making money, but investing in equity is considered best among them. Following some simple tips will help you steer clear of losses and maximize your gains over the long run.

  • Never rush into an investment. Always make informed decisions. If you are looking at short term investments (where you want to retrieve your money in less than a year) then choose debt products (such as debt mutual funds). In this case, the risk is less but so are the returns.
  • If you want higher returns, then choose a long term investment such as the stock market.
  • Beware of fraudulent companies. Not all the “upcoming” companies you come across are genuine.
  • Buying high and selling low are the most commonly made mistakes. Do not Panic; in fact you just need to do the opposite.
  • Do not believe superstitions or word of mouth when it comes to investing.
  • One fundamental rule to remember: never borrow money or take a loan to invest. The surplus you have left after all your expenditures is what you should use for investing instead of splurging it unnecessarily.
  • Stock market is not a game of gambling- it is very much an investment to fulfill your financial goals
  • Avoid day trading, use your common sense and don’t get too greedy.
  • It is always advisable to seek professional help, provided they are reliable.
  • Go in for a systematic investment plan [SIP] – which helps you save regularly and with discipline.

You can definitely control your investments, but you can’t control their performance. Once you understand that, you are well on your way to wealth generation. It isn’t just about increasing the value of your finances, it is also about improving your credit score and credit records so as to be able to avail loans easily and secure your financial future.

No amount of speculation can help you get more gains, it is only a tentative calculation you will have to go by. But, the advantage is that the more patient you are and the longer you invest – you will be rewarded well and be able to achieve all your financial goals.

Top 10 Reasons To Avoid Gambling

10. The cause of indolence

Gambling affects your life negatively. If you are a regular, you might have missed your work occasionally because of a late night games at the casino. On the other hand, if in case, after a major loss you make an attempt to work you won’t be able to concentrate for your mind will be preoccupied with the depressing thoughts from the loss. Many of the gamblers depend on the “luck factor” and start day dreaming ultimately losing interest in their job.

9. Results in depression and anxiety

Gambling addiction can be the reason of anxiety, depression and a host of other mental problems. The pressure of gambling addiction can generate terrific emotional pain which can only get worse over time. If you are a gambler and you feel anxious or depressed, it is suggested that you seek help right away. Gambling addiction has the highest number of suicide rates. Individuals are overwhelmed by this obsession and become despondent and hopeless, believing suicide is the only way out of the pain.

8. Deteriorates your physical health

If you have been gambling on a regular basis your physical health is at stake. People who gamble impulsively start neglecting their health. Additionally, the stress of the gambling obsession can even cause stress on your heart, particularly after shocking monetary losses. The emotional fall can in fact have an effect on your physical body in negative ways. A sheer game of luck, it will only cause you pain and nothing else. Is it not one of the big reasons to avoid gambling?

7. Makes you selfish, moody and rude

I have witnessed a lot of individuals who underwent a moral transformation to the worse after they got into gambling. The habit destroys the person ethically and makes him moody and rude. The greediness keeps his mind engrossed in the imaginary money, ultimately making him selfish. Inveterate gamblers don’t think about other people. Their only aim of life is to finance their addiction and to win back their lost money.

6. Will make you lose your friends

You might be wondering how this habit of yours will make you lose friends. Well, if you are in a habit of gambling then it is more likely that if not today maybe later you’ll borrow money from them. Chances are you’ll not be able to pay them in time due to frequent losses. This will really cause strain in your relations. In addition, your addiction will make you ignore your friends as you will be preoccupied with gambling. You may then even miss social outings and some very important events.

5. Ruins your family

Gamblers are too tough to reform ultimately turning out to be a loser and having no family. Not a soul wants to be in this world with a gambler who is grumpy, unstable and squanders funds. So the outcome is the spouse filing a case of divorce or just leaving the partner. Many families have been torn apart by this disastrous obsession.

4. Induces crime

Fascination of gambling compels people to commit crimes to support their game. An impulsive gambler never leaves this addiction even when he is left with no money and instead takes on crime to finance his very basic need of gambling. Some people even turn towards domestic violence and torture their spouse on a daily basis.

3. Diverts you from your aim

When your life is all about gambling and just gambling, it then becomes your primary activity. All of your vigor, motivation, energy and inspiration are only gambling related and you tend to lose focus on the main aspects of your life. If you have any special talents or hobbies, it is most likely that these hobbies will not be given priority and you’ll choose to ignore them.

2. Puts on hold all your future goals and aspirations

When you are addicted to gambling, it is obvious to stop thinking about the future. A gambler always lives for the moment and desires only instant gratification to feel what is known as the “gamblers high”. It becomes very hard then to focus on any of the future prospects as they tend to live in a world of fantasy, placing bets and dreaming that big jackpot. Neglecting aspirations and all future goals is living a worthless life and therefore this is one of the prime reasons to avoid gambling.

1. A curse that destroys you financially

It doesn’t take a lot of time to dig up a huge financial hole if you have an impulsive gambling obsession. Gambling can take away hundreds or perhaps even thousands of dollars in no time and add up to your debts. I have seen that people take lots of years to clear the debt and in their endeavor they even become bankrupt, ultimately devastating financial as well as personal life. Money is the reason why we all live and therefore the biggest of all reasons to avoid gambling is to save money.