What legal options are there to reduce a capital gains tax bill?

98-00 · 24-09-2017 9:37am #1

Below is an example of capital gains tax from an investment, I think I have it right:

€5,000 Capital
€10,000 Capital Gains
€1,270 Gains Allowance
€8,730 Taxable
33% Capital Gains Tax Rate
€2,880.90 Tax Due
€7,119.10 Left from the €10,000 after tax
€12,119.10 Money in my pocket

€2,880.90 is a big chuck to be paying, can anything, legal, be done to reduce this figure?
It's all a recent investment so I don't think an historic lower rates could be applied.
Are there lower tax rates allowed in any circumstances?

Peregrinus · 26-09-2017 5:01am

Well, if there were any expenses associated with either the acquisition or the disposal of the asset, you could deduct those in calculating your gain, and that would reduce the effective tax rate.

MollsGap · 26-09-2017 8:35pm

If you wait until after the budget to sell the investment (if not done so already) maybe the cgt will reduce down to something closer to that of the UK rate? Worth waiting the few days if that's possible to see what happens

Peregrinus · 27-09-2017 4:19am

Look on the bright side. Through a "recent investment" you have leveraged €5,000 into €12,119.10 (after tax), which is an after-tax return of 142% over the (presumably not very long) life of the investment. Nice!

98-00 · 27-09-2017 8:32am

Would be nice!, I just pulled the number out of thin air for the example, I don't have a problem paying but if I can reduce what has to be paid.
From what I understand, if the money is reinvested before the end of the tax year you don't have to pay the tax, or at least it is deferred until it is cashed out in the future, which as you mention could have a lower rate then. Do the government prize bonds count as an investment?

nompere · 27-09-2017 8:43am

Your understanding, unfortunately, is wrong. There's no such deferral.

Peregrinus · 27-09-2017 8:45am

You're talking about rollover relief, which only ever applied to a limited class of disposals - e.g. business assets. If you reinvested your disposal proceeds in another asset of the same class, you could defer your liablity to CGT.

We don't know whether the assets in your case would have qualified for rollover relief, but the question is academic. The relief was abolished some years ago.

98-00 · 27-09-2017 9:41am

Thanks for the replies and information.

MollsGap · 27-09-2017 7:32pm

98-00 wrote: »

Thanks for the replies and information.

Best of luck with your nice dilemma, Profit!

What legal options are there to reduce a capital gains tax bill?

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