Chancellor orders review of Capital Gains Tax
The Chancellor has asked the Office of Tax Simplification (OTS) to carry out a fundamental review of the Capital Gains Tax (CGT) regime. The wide-ranging review will consider the fundamentals of the regime, including tax rates, exemptions, and reporting. We expect the OTS to consider aligning CGT rates (currently 10%-28%) with Income Tax rates (up to 45%), the exemption for gains on main residences, and the uplift in base cost on death. Will the OTS also look again at Business Asset Disposal Relief (previously Entrepreneurs’ Relief)?
The OTS has requested responses on the principles of CGT by 10 August 2020, and on the detailed issues by 12 October 2020.
The Treasury insists that the review is simply routine, but it seems likely that tax rates can only increase and exemptions decrease as a result of this review.
All taxpayers with unrealised gains on assets eg share portfolios and buy-to-let and second properties, should consider planning for CGT and Inheritance Tax now, and certainly before the Autumn Budget.
For more information, please contact Katharine Arthur or your usual haysmacintyre contact.