Consumers urged to take capital gains tax action now

UK taxpayers are expected to waste a shocking £552 million in unnecessary capital gains tax (CGT) payments this year, according to research by unbiased.co.uk.

The research shows that this wastage figure has increased by £36 million as a result of the CGT rate rise from 18% to 28% for higher rate tax payers, as announced in the Chancellor's emergency budget in June.

Capital gains tax is a tax charge that arises from the disposal of assets, such as shares or buy-to-let properties, charged at 18% for lower and 28% for higher rate tax payers.  Every individual has an annual capital gains tax free allowance, which stands at £10,100 for the current 2010/11 tax year.

Unbiased.co.uk's checklist for mitigating your CGT liability:

The first £10,100 of capital gains each year is exempt from tax

This limit applies to each individual - if you are married or in a civil partnership you each have an annual exemption and should ensure each of you maximise your CGT free gains.

‘Bed and ISA' option - a common form of CGT planning where investors sell investments or assets, use their annual CGT exemption and then buy the assets back within a tax-efficient ISA in the new tax year, thereby ‘washing' out the capital gains  

‘Bed and spousing' - investors sell their investments or assets, then their spouse or civil partner buy them back, which means the gain materialises for the seller and any future gain is in the spouse's name and both of the couple are utilising their annual CGT exemptions. 

Consult an independent financial adviser (IFA) to find the most CGT efficient options for you

Karen Barrett, chief executive of unbiased.co.uk, comments: "Capital gains tax has been a hot topic ever since the chancellor announced the increased the CGT rate to 28% for higher rate tax payers.  But even before that change, we have seen far too many people making unnecessary CGT payments - simply by not making use of tax efficient ways when it comes to disposing of their assets.

"There are many ways of reducing your CGT liability, but the tax system is complex and can easily be confusing for consumers to understand.  Consulting an independent financial adviser is an easy way to get tailored tax advice on your individual tax liability, to help avoid making any unnecessary tax payments going forward."

To find an IFA near you go to unbiased.co.uk.