The UK lifts out of recession, how to save on capital gains tax and requirements for single sex toilets
Today’s blog post covers a variety of topics, starting with the good news that the UK is no longer in recession. Plus – tips on how to save on capital gains tax, funding for self-driving vehicles and new regulations requiring non-domestic buildings to provide single-sex toilets.
Official figures show that the UK no longer in recession
Figures published by the Office for National Statistics on 10 May 2024 show that the UK has officially exited recession.
UK gross domestic product (GDP) is estimated to have increased by 0.6% in Quarter 1 (Jan to Mar) 2024, following declines of 0.3% in Quarter 4 (Oct to Dec) and 0.1% in Quarter 3 (July to Sept) 2023. The UK had entered a period of recession after its GDP had shrunk for more than two quarters in a row.
To read more, see: https://www.ons.gov.uk/economy/grossdomesticproductgdp/bulletins/gdpfirstquarterlyestimateuk/januarytomarch2024
How can you save on capital gains tax?
Over the last two years, the tax-free allowance for capital gains tax has been cut by over three-quarters. For the tax year that recently began on 6 April 2024, the Annual Exempt Amount has been reduced to £3,000 (£1,500 for trustees).
These reductions mean that more and more of us are likely to be affected by capital gains tax.
What is capital gains tax?
You could think of capital gains tax as a tax you pay when you make money from selling something that has increased in value. This “something” could be anything from a house to shares or even a piece of art. So, let’s say you bought shares for £500 and sold them later for £1,000. The £500 profit you made could be subject to capital gains tax.
How much tax you pay depends on a few things. Firstly, it depends on what you are selling and how much profit you have made. Secondly, it depends on how much money you make overall in a year. For instance, if you earn more, you might pay a higher rate of tax on your gains. Thirdly, the total amount of gain you make in a tax year is reduced by the Annual Exempt Amount.
However, not all gains are taxed. For instance, if you sell your main home or certain types of investments like ISAs, you might not have to pay any tax on the profit.
Are there ways you can reduce capital gains tax?
There are a few things you could think about doing to help reduce the amount of capital gains tax you might need to pay.
- As mentioned above, the rate of tax you pay depends on how much money you make overall. If you can reduce the income you are taxed on, this might mean you can pay capital gains tax at a lower rate. One way to do this is by making pension contributions as these reduce your income for tax purposes.
- Where an asset can be separated into different parts – a portfolio of shares would be a good example – you might be able to split the sale between two tax years. For example, you might sell some shares on 5th April, and then more shares on 6th April. This could give you two years’ worth of allowances to spread your gain against.
- If you have no plans to sell off assets during a tax year, you could sell some of them to use up your Annual Exempt Amount, and then immediately buy them back within an ISA. Any future gains you make on those assets will then be tax-free.
- The Annual Exempt Amount can be combined for jointly owned assets, so you may be able to split your assets with your spouse or civil partner. You can also transfer assets between you without having to pay capital gains tax. If your spouse or civil partner pays income tax at a lower rate than you do, or perhaps has made a loss on selling other assets, this might be a way of reducing the capital gains tax you pay as a couple.
The reductions in Annual Exempt Amount mean that more of us could end up having to pay capital gains tax. However, there may be ways to reduce the amount you pay.
As experienced tax advisers, we have tools that can help you calculate what capital gains tax you might have to pay and can provide personalised advice on the steps that may help you reduce that tax. Why not talk to us to make sure you’re following the rules and not paying more tax than you need to?
British AI company secures $1 billion funding for self-driving vehicles
The artificial intelligence (AI) company, Wayve, has secured a $1.05 billion investment to develop the next generation of AI-powered self-driving vehicles.
The British company will be using this investment to develop and launch the first “embodied AI” technology for self-driving vehicles in the UK.
What is embodied AI?
Embodied AI refers to artificial intelligence systems that are not only capable of processing information and making decisions but are also situated within and interacting with physical environments.
Embodied AI in self-driving or automated vehicles means that the vehicle’s AI system will be able to interact with and learn from a real-world environment. It will include the ability to learn from and deal with random actions by drivers and pedestrians.
What the investment could mean?
The self-driving vehicle industry is expected to be worth £42 billion and by 2035 will have created more than 38,000 more skilled jobs.
It is believed that self-driving vehicles have the potential to reduce accidents, most of which occur because of human error. The Automated Vehicles Bill, currently being considered by the government, sets out robust safety testing provisions and confirms where liability lies for self-driving vehicles.
Wayve co-founder and CEO, Alex Kendall, said that the investment “sends a crucial signal to the market of the strength of the UK’s AI ecosystem, and we look forward to watching more AI companies here thrive and scale.”
New requirements for single sex toilet facilities
New requirements for single sex toilet facilities in new non-domestic buildings are being brought forward.
Mixed sex toilet spaces where cubicles and hand-washing facilities are shared have been on the rise, but concerns have been raised about the privacy and dignity they deny to both men and women.
The new building regulations will mean that new non-domestic buildings, including offices, restaurants, shopping centres, and public toilets will have to provide separate single-sex toilets for women and men. Self-contained universal toilets can be provided in addition where space allows.
Only if there is no space for single-sex toilets can universal toilets can be provided instead. A universal toilet is a self-contained, private toilet in a fully enclosed toilet room with a wash handbasin for individual use.
The regulations will not only apply to new non-domestic buildings, but also buildings that have a material change of use. Existing buildings that do not have a material change of use are not affected.
Kemi Badenoch, Minister for Women and Equalities, said: “These regulations will guide organisations to design unisex and single-sex toilets, ending the rise of so-called “gender-neutral” mixed sex toilet spaces, which deny privacy and dignity to both men and women.” See: https://www.gov.uk/government/news/government-to-lay-new-law-to-halt-the-march-of-gender-neutral-toilets-in-buildings