CAPITAL GAINS TAX (CGT) – MAJOR CHANGES POSSIBLE
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The government is looking hard for ways to soften the blow to the nation’s finances resulting from the pandemic, and tax rises of some kind seem inevitable.
Capital Gains Tax review – first report published last week by the (wonderfully named!) Office of Tax Simplification has set out several potential changes to the regime for Capital Gains Tax (CGT). Rishi Sunak – who commissioned the report in July - must now decide which, if any, of the recommendations he wants to take forward.
The 2 key focal points of the report were:
To equalise the rate of CGT with that of Income Tax - which would amount to a significant rise. See page 9 of the report.
A reduction in the annual allowance for CGT from £12,300 to as low as £1000 - which would bring far greater numbers into the scope of the tax. See page 10 of the report.
Other recommendations included:
Greater alignment between CGT and Inheritance Tax rules. See page 15 of the report.
Scrapping the business asset disposal relief (known as Entrepreneurs’ Relief until 5th April 2020) which has already been reduced to a £1 million lifetime allowance (from £10 million) in the last budget.
Abolishing Investors’ Relief which was only introduced in 2016.
Changes may be announced in the next Budget (which will possibly take place in March 2021) but for now, we are here to offer advice on how to take advantage of the current CGT rates whilst they last.
If you have any plans to sell something that is likely to give rise to a Capital Gain you should consider carefully whether it could be tax advantageous to bring the transaction forward before any potential changes in the legislation and tax reliefs come into force.
Please get in touch to discuss your specific circumstances.