Capital Gains Tax And Inheritance Tax Flashcards
If you pay higher rate income tax
You’ll pay
-24% on your gains from residential property
- 28% on your gains from carried interest if you manage an investment fund
- 24% on your gains from other chargeable assets
If you pay basic rate income tax
Work out how much taxable income you have - this is your income minus your personal allowance and any other Income tax reliefs you’re entitled to
Work out your total taxable gains- deduct your tax free allowance from your total taxable gains. Add this amount to your taxable income
If this amount is within the basic income twx rate band, you’ll pay 18% on your gains from 30 October 2024
If you have gains from both residential property and other assets
You can use your tax free allowance against the gains that would be charged at the highest rates
Definition of Capital gains tax
Capital gains refers to profits gained from the sale of capital assets
Definition of inheritance tax
Inheritance tax is a tax on the estate (the property, money and possessions) of someone who’s died.
When does inheritance tax kick in
When someone inherits over £325,000
Why is inheritance tax a hot topic
As property prices in many parts of the Uk has risen so high that families on average salaries are having to pay 40% tax when they inherit a modest home valued at £400k to £600k.
What is the threshold of inheritance tax
£325,000 and not changed since 2009
Describe key features in UKs IHT
IHT is a tax on tge eastste of someone who has died
The standard IHT rate is 40%
Its only charged on the part of the estate above the threshold (£325,000)
