The financial landscape is always evolving, and one of the key changes announced in the Autumn Budget affects Capital Gains Tax (CGT). From 30th October 2024, there will be an increase in the main rates of Capital Gains Tax. Ensuring your savings and investments are held in the right places is now more critical than ever.
At Fogwill & Jones, we work closely with clients to optimise their investment portfolios, helping to minimise tax liabilities and maximise returns. One of the simplest ways to achieve this is by utilising tax-efficient investment vehicles such as Individual Savings Accounts (ISAs), which are not subject to CGT.
What’s Changing?
CGT has increased from 10% to 18% at the lower rate, and 20% to 24% at the higher rate. This change came into force immediately, meaning anyone who had sold assets with gains on the morning of the Budget (30 October 2024), will fall into the new rates.
This change could affect anyone with investments in shares, property (excluding primary residences), or other assets outside of tax-advantaged accounts. For higher-value investments, even modest gains could now lead to a tax liability.
Example:
James, an investor, sells shares and makes a £10,000 gain in 2023. Under the rules for 2023-24, £6,000 is exempt, and he only pays CGT on £4,000 – which would be a bill of £800 if he is a higher-rate taxpayer. From April 2024, his exemption falls to £3,000, meaning he will be taxed on £7,000 of his gain instead. If James is a higher-rate taxpayer and the gain was realised after 30th October 2024. he could face a CGT bill of £1,680 (24% on gains above the threshold).
How Fogwill & Jones Can Help
With the reduction in the CGT allowance, it’s vital to review where your investments are held. Fogwill & Jones can help you:
Maximise Your ISA Allowance:
ISAs are a powerful tool for shielding your investments from CGT. You can invest up to £20,000 per year in an ISA, and all capital gains, dividends, and interest within the ISA are tax-free.
Strategic Asset Allocation:
We can help you diversify your investments across various tax-efficient accounts, including pensions, which offer tax advantages while you save for retirement.
Plan Your Gains:
Timing is key when it comes to realising gains. We assist clients in spreading gains over multiple tax years, ensuring they make full use of the annual exemption and avoid unnecessary tax liabilities.
Explore Trusts and Other Structures:
For those with larger estates or complex investment needs, we can advise on setting up trusts or other structures to protect your wealth from excessive taxation.
Case Study: Helping Emma Reduce Her Tax Bill
Emma, a long-term investor, holds a mix of shares and a rental property. With the CGT changes looming, she consulted Fogwill & Jones to review her investment strategy.
Our solution:
We helped Emma transfer part of her portfolio into ISAs, protecting future gains from CGT. We advised her to stagger the sale of some shares across multiple tax years to spread out the tax liability and also set up a trust for her rental property to manage the tax implications effectively.
As a result, Emma reduced her exposure to CGT and positioned her portfolio for long-term growth without unnecessary tax burdens.
Get Advice
The reduction in the CGT allowance highlights the importance of proactive financial planning. Whether you’re an experienced investor or just starting to build your portfolio, Fogwill & Jones can help you protect your gains and grow your wealth in a tax-efficient manner.
For personalised advice, contact us at 01142 588899. Let us help you make the most of your investments.
