Capital gains tax (CGT), tax paid on the profit you make from the sale or disposal of an asset such as shares or property, should be reviewed and overhauled, according to some experts. What might change and how could you be affected?
This does not constitute advice and advice should be sought in all instances before acting on it. The Financial Conduct Authority does not regulate tax advice.
Are changes to CGT on the horizon?
In an effort to cover some of the costs associated with the coronavirus recovery process, Chancellor Rishi Sunak’s commissioned report indicated that approximately £14bn could be raised by cutting exemptions and doubling rates.
A new report from the Office for Tax Simplification proposed numerous changes to CGT in an attempt to curb the questionable behaviour of people exploiting rules and loopholes to their benefit.
Some highlights from the report suggest:
- Eliminating the separate rates of tax for gains and income
- Cutting the annual £12,300 gains allowance to as low as £2,000
- Doing away with incredibly complex relief intended to encourage entrepreneurship that does not currently
- Equal tax on products of labour – whether that is wages, dividends, or share options.
The OTS says that the tax – which is currently 10% for basic rate taxpayers and 20% for higher-rate taxpayers – could be doubled to bring it in line with income tax. Currently, the first £12,300 of capital gains is exempt, with about 50,000 taxpayers reporting profits just under that threshold last year and is one of the rules that has commonly been exploited.
Those who would be affected the most by these proposed changes are wealthy people who own second homes or assets not protected from taxation.
How will this affect you personally?
While the report identifies many rules that need to be reviewed and amended, some question how fair and simple these changes actually would be.
If you have questions about how these potential new changes could affect you, don’t hesitate to get in touch with us. We’re happy to evaluate your plans and build new ones with you should these rules come to pass. Contact us today to ensure you’re saving as much tax as possible.
Do you need help with your property portfolio?
Investments | Financial Planning | Retirement | Save Tax | Protection |
Dental & Medical Financial Services have been helping doctors and dentists to build and protect their wealth, whilst saving tax for over 25 years.