Legal News | 9.04.20
Weekly Update
A possible silver lining when assets drop in value?
Whilst the drop in value of our assets is a negative outcome of Covid-19, it may offer an opportunity for those considering gifting their assets to their future intended heirs in a tax efficient way.
What is Capital Gains Tax?
Capital Gains Tax is due on a disposal, including a gift, and is calculated on the disposal value. For example, if you bought a painting for £10,000 and on the date that you gift the painting, the value is £15,000, the capital gain would be £5,000.
So why is now a good time to gift my assets?
With asset values falling, it may well be the time to consider making a gift of an asset previously heavy with gains. Those gains may have reduced or even been wiped out.
Happy New (tax) Year
On 6 April we entered the 2020/21 tax year and the annual CGT tax-free allowance has risen to £12,300. This means that an individual will only be subject to a CGT liability if their total capital gain from all of their disposals in the tax year (6 April 2020 to 5 April 2021) exceeds £12,300.
It should not be forgotten that inheritance tax may be payable if the donor dies within 7 years of making a gift. However, the amount payable will be calculated as at the date of the gift, therefore gifting assets now whilst they may have a lower value can also help with your estate planning.
The 2020/21 tax year has also seen a rise in the residential nil rate band to £175,000, meaning that a married couple with children now has the full £1m of the available nil rate band pledged by the government back in 2015.
Wills signing
There have not been any revisions in the law regarding the witnessing of Wills since our last update. However, Wansbroughs continues to monitor all legal changes.
