This week the Chancellor, Rishi Sunak, ordered a review of Capital Gains Tax (CGT), which is fuelling speculation that there could be an increase on the taxes paid when an asset is sold, such as property and shares. This is likely to have an impact on small business and individuals, for example in the sale of shares or other assets which have increased in value between the point of purchase and sale.
It’s clear that with a deficit of at least £350bn according to a recent Office for Budget Responsibility (OBR) report, the government needs to put plans in place to fill the shortfall caused by a huge programme of support for the economy, and an increase in taxes would be a relatively quick win. With little understanding with the general voter of CGT, it would be an easy tax rise to sell to the electorate.
Mr Sunak has also asked the Office for Tax Simplification (OTS) to report on how CGT compares with other taxes. One thought is that there is an alignment coming between Income Tax and CGT in the near future, seemingly creating a level playing field, and further impacting higher rate tax payers with assets to sell.
What we don’t know yet is any details on the timings; whether any CGT increases will be effective in the coming weeks, later in the autumn, or at the start of the next tax year. But, what we do know is that any review rarely results in a decrease in tax.
Our advice is to review your plans, bearing in mind that the tax rates in place at the moment may not be around even in the next few months or next year.
Please do contact the team at Inspire to discuss in more detail – we’re here to support you.