Protect your assets and assist your Limited Company with informative, valuable SSAS planning delivered by One Crown Pensions.
There have recently been changes to capital gains tax. The Chancellor announced a change to capital gains tax in 2024’s Autumn Budget. The purpose of these changes is to raise revenue. So, let’s take a look at the CGT changes that were announced and how you can beat them.
What is Capital Gains Tax?
Capital gains tax is a type of tax that is payable on the profits you earn from the sale of an asset. For example, if you as an individual purchase a second home and it increases in value over the original purchase price, the rise in cost is potentially liable to capital gains tax.
Labour Capital Gains Tax Changes 2024
In the Autumn Budget 2024, Labour announced capital gains tax changes . These changes will affect everyone. Here’s an overview of how the increase in capital gains tax will change things for:
Basic Rate Taxpayers: Capital Gains Tax will rise from 10% to 18%.
Higher Rate Taxpayers: Capital Gains Tax will rise from 20% to 24%.
Business Asset Disposal Relief (BADR): From 6th April 2025, Capital Gains Tax on BADR will rise from 10% to 14%. From the 6th of April 2026, this will increase further to 18%.
Investors’ Relief: From 6th April 2025, Capital Gains Tax for Investors’ Relief will rise from 10% to 14%. From the 6th of April 2026, this will increase further to 18%.
Carried Interest: From 6th April 2025, the rate of CGT applied to carried interest will increase from 10% and 28% to 32%. It will increase again in April 2026 to 36%.
How to Avoid Capital Gains Tax UK
If you’re worried about CGT changes and you feel they are a threat to your investments, income, and pension, you’re in the right place. While it might feel daunting to make changes to your current financial strategy, proactive planning will help you mitigate CGT costs and protect your finances for the long term.
If you own your own Company and you are the Director of that Company, you naturally want to try and avoid capital gains tax rises, and SSAS is the solution. SSAS pensions are statutorily exempt from capital gains tax and tax on all profits, including profits from any investments you may hold.
Book a call with a member of our team to discuss SSAS and find out whether it’s the solution you’re looking for.
Mitigating CGT with SSAS: A Case Study Example
We thought it would be helpful to share a recent case study which allowed us to mitigate a client’s payable capital gains tax with the use of SSAS.
At the moment we have a client who actually happens to have a separate Limited Company, an investment Company, that holds a large piece of land. That land is currently valued at £1,000,000, which the Company has purchased over a number of years.
The Members of the pension scheme (who are also the Directors in this Limited Company) are very mindful that if the land they hold goes for planning, it will potentially increase up to £3,000,000 in value post planning. That is a substantial gain.
However, such a gain would attract capital gains tax. So, they approached us and asked whether they could put the land into SSAS and the answer was, yes.
So, let’s assume that once the land has been valued it is worth £1,000,000. Despite the £800,000 held within the SSAS, our clients were a little bit short. However, we were fortunate that they hadn’t actually put contributions into the SSAS for some time. As such, they had a lot of unused allowances they could carry forward and make use of - an extra £200,000, in fact.
We have moved the land successfully into the SSAS and, once post planning permission has been granted, our clients expect the land to increase in value to £3,000,000. If we had left this land in the Limited Company, the uplift in value post-planning would have been subject to capital gains tax and the cost would have been substantial. So, you can understand why our clients wanted to get the land into a pension.
Once they sell the land, that £3,000,000 will be returned to the SSAS and serve as a valuable sum to support their retirement. As you can see, SSAS is an invaluable tool for managing your affairs and assets.
Find out if you’re eligible for SSAS
Don’t Understand CGT? Speak with Our Team
If you’re confused by the changes to capital gains tax and you want to understand exactly how they affect you, book a call with us. We would be happy to answer your questions and share how planning with a SSAS protects your assets.
For more information about SSAS and the benefits it provides, discover our SSAS Video Hub.
