KEY GUIDE | Month 20XX | Folio Title Folio Title Folio Title Folio Title 5 SPECIAL REPORT | January 2026 | Y ar End Tax Planning CAPITAL GAINS TAX PLANNING How can I manage asset disposals to help minimise my capital gains tax (CGT) bill? Everyone has an annual CGT exempt amount, which in 2025/26 makes the first £3,000 of gains free of tax. ● Gains above the exempt amount are taxed at 18%, where taxable gains and income are less than the non-Scottish basic-rate limit of £37,700 in 2025/26. ● The rate is 24% on gains that exceed this limit. You should generally aim to use your annual exempt amount by making disposals before 6 April 2026. If you have already made gains of more than £3,000 in this tax year, you might be able to dispose of loss-making investments to create a tax loss. This could reduce the net gains to the exempt amount. Timing disposals If your disposals so far this tax year have resulted in a net loss, the decision on whether to dispose of investments to realise gains before 6 April 2026 will depend on the amounts involved. Depending on your level of income, timing your disposals either before or after the end of the tax year could result in more of your gains being taxed at 18% rather than 24%. Transferring assets between married couples or civil partners before disposal might save CGT, particularly where one partner has an unused exempt amount, has not fully used their basic-rate tax band or has capital losses available. You should generally leave as much time as possible between the transfer and the disposal. CGT is normally payable on 31 January after the end of the tax year in which you make the disposal. You could therefore delay a major sale until after 5 April 2026 to give yourself an extra 12 months before you have to pay the tax. However, a payment on account of CGT must be made within 60 days of a residential property disposal (other than of an exempt principal private residence). There is therefore no timing advantage to delaying such a disposal. I’m self-employed – what can I do to bring down my tax bill? The director/employee tax planning approach around income levels applies equally to people who are self-employed. If you are self-employed, you might be able to affect the timing of your taxable profits to avoid paying tax at 45% (48% in Scotland), but this will depend on your accounting date. It is the business profits actually arising in the tax year that are taxed. If your accounting period is not 5 April or 31 March, your taxable profits for 2025/26 will be calculated by adding together your profits from 6 April 2025 up to your accounting date and your profits from the accounting date up to 5 April 2026. These figures are obtained by apportioning the profits of the two accounting periods. This makes it difficult to affect the timing of taxable profits, so it could be worth changing your accounting date to 31 March or 5 April. Apart from making it easier to determine the taxable profits of a tax year, it will also simplify the completion of tax returns. As a business owner, could employing my partner help to minimise tax? You could pay an otherwise non-earning partner a salary, on which you will get tax relief. You normally must keep PAYE records even if the salary is below the employer NICs limit, which is £417 a month in 2025/26. A salary between £542 and £1,048 a month will mean your partner avoids paying any employee NICs, but will still qualify for state benefits. Employer NICs will be payable at the rate of 15% on any salary payments over £417 a month, but you might be able to offset the Employment Allowance of up to £10,500 a year against your total employer NICs bill. You can also pay an employer’s contribution to your partner’s personal pension plan. There are no taxes or NICs on the payment itself, and it should be an allowable business expense. However, the total value of your partner’s salary, benefits and pension contributions must be justifiable in relation to the work performed. Alternatively, you could plan ahead to share the profits of your business by operating as a partnership in 2026/27. You both need to be genuinely involved as business partners, though not necessarily equally. Useful link: www.gov.uk/business – helpful advice for businesses. Planning point With corporation tax charged at 25%/26.5% once company profits reach £50,000, there are now fewer tax advantages to running a business as a limited company than was previously the case. If you are considering incorporation, you need to carefully weigh up the tax, NIC and other advantages and disadvantages of taking this step. The increased tax on dividends from 6 April 2026 will also weigh against incorporation. Credit: Unitone Vector\shutterstock.com
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