Capital gains tax (CGT) is levied on capital gains made on the disposal (including gifts) of most assets. However, if the disposal is of ‘business assets’ by a trader (including a personal trading company) then it is possible to defer the charge. Methods of deferral available for both self employed and companies are via the purchasing of a replacement asset (‘Business Asset Rollover relief’) or ‘Hold over relief’.
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Throughout an accounting period a director will withdraw monies from the company against the director’s loan account (DLA), the withdrawals being satisfied usually by the taking of a salary and/or bonus) and/or dividends (dividends being preferable as no NICs are payable) or by repaying the monies withdrawn.
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Spouses and civil partners benefit from special rules for capital gains tax purposes which allow them to transfer assets between them at a value that gives rise to neither a gain nor a loss. The transferee spouse/civil partner effectively takes on the transferor’s base cost. This can be very useful from a tax planning perspective to maximise available annual exempt amounts and capital losses.
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