Q. I am domiciled in England and Wales and last week I sold an investment property for £250,000 which I purchased with cash 10 years ago for £200,000. Will I have to pay any capital gains tax?

A. The sale of the property will be classed as the disposal of an asset for capital gains tax purposes and assuming that the property cannot be regarded as your principal private residence, tax will be payable on the gain you have made since you bought the property i.e. £50,000. That gain will be reduced by costs of acquisition and disposal and possibly by any expenses which you may have incurred in improving the property. Since the June 2010 emergency budget, the rate of capital gains tax payable by an individual depends on whether they are a basic or higher rate income taxpayer. If a basic rate taxpayer, then the rate of tax payable on any gain is 18% but if a higher rate tax payer the rate of tax payable is 28%. If the individual is a basic rate tax payer but the amount of the gain when added to the individual"s income exceeds the higher rate threshold then the amount of the gain up to the higher rate threshold is taxed at the basic rate of 18% but the amount above the higher rate threshold will then be taxed at 28%. If you have made capital losses this tax year or in the past then those can also be deducted from the gain.

When considering whether to sell or gift an asset in the future and which may attract capital gains tax, it is always advisable to consult a suitably qualified professional person who should be able to advise of how to minimise the tax payable.

For more information regarding capital gains tax please contact Wills & Probate Solicitor, Emma Small on 01949 830 815 or email esmall@fraserbrown.com