10 December 2007
Capital Gains Tax at 18% - winners and losers
“Any simplification of the excessively complicated Capital Gains Tax (CGT) rules is to be welcomed” said Paul Tobias, head of Hart Brown’s Trust & Investment Department, commenting on Alistair Darling’s Pre Budget Speech of 9th October.
Paul added “but, even allowing for the proposed new CGT flat rate of 18%, the combined effects of this and the abolition of indexation allowance and taper relief are likely to produce higher CGT bills for many private investors. This is particularly so for long term stock market investors, which is surprising in light of successive governments’ efforts to encourage saving not to say investment in UK plc.
There is, however, a limited window of opportunity for investors to review their portfolios and, where appropriate, make some disposals to capitalise on the continued availability of indexation allowance and taper relief during the remainder of the present tax year ending 5th April 2008.
On the positive side, the proposed new 18% CGT flat rate is likely to be beneficial to short term “single asset” (e.g. second home/buy to let properties) investors, who might otherwise have expected to pay 40% CGT on the bulk if not all of their chargeable gains. Investors in this category should bear in mind that the new tax rate is not scheduled to apply until next year commencing 6th April 2008, so may be better off deferring sales until after that time.”
Anyone wishing to review their CGT position in the light of the government’s proposed CGT changes should contact Hart Brown Solicitors on 01483 887766 and ask for the Trust & Investment Department to discuss their circumstances.