Concerned about the effect of tax on your personal law situation? We can assist you.
Guiding you through UK tax law
At Gibson Kerr, we hope to look after you throughout your life – so we aim to know enough about your situation to provide advice on tax and help you plan effectively. There are various personal taxes which might affect you and your estate, or the estate of a loved one – Capital Gains Tax, Income Tax and Inheritance Tax.
What is income tax?
Income tax is tax which arises on most of the income you earn. There are different rates of income tax depending on the amount of income that you earn in a tax year. Most people in the UK also have a personal allowance for income tax, which is the amount of income you can earn in one tax year before any income tax is paid.
Income tax issues might arise as part of the administration of a deceased person’s estate. For instance, the deceased person might have been self-employed and it might be necessary to complete a tax return up to the date of death.
Additionally, a tax return might have to be completed, and tax paid, on any income earned by the estate during the administration period and the executor has a duty to advise beneficiaries of an estate of the amount of income earned and tax paid on their share of the estate. We can advise you on these aspects of income tax and assist with the preparation of the relevant tax returns.
What is Capital Gains Tax?
Capital Gains Tax (CGT) is the tax which becomes payable when you sell, gift, exchange or transfer an asset. The tax is payable on the gain you make, not the amount you receive in exchange for the item. Tax is paid at two different rates: either 18% or 28% on residential property, depending on the your circumstances, or 10% and 20% on all other assets, again depending on your circumstances.
Some assets are exempt from CGT such as personal effects under £6,000, your car and normally your home. There is an annual allowance for CGT known as the “annual exempt amount” and you only pay CGT on any gains above the annual exempt amount. For the tax year 2019/20 the “annual exempt amount” is £12,000.
CGT might be an issue during the administration of a deceased person’s estate. For instance, if an executor chooses to sell a property which is part of the estate and sells it for a gain, there might be CGT payable on the sale.
There are ways to minimise the amount of tax payable in such circumstances and our personal law solicitors can advise you on this.
CGT might also arise in the course of a separation and, again, our solicitors can provide you with information and advice to help you minimise the effect of this.
What is inheritance tax?
Discover more about inheritance tax
For information and advice about any of these issues, or if you wish to undertake some personal tax planning, please call our personal law solicitors today.