9 December 2020
Capital Gains Tax UK & Inheritance Tax threshold UK in 2021 – what’s ahead? We’ll share our professional recommendations with you now. You can read now, or download the below PDF copy of this information, so that you can read in your own time.
Capital Gains Tax UK changes are coming. A recent report from the UK Office of Tax Simplification (OTS) following a review of the Capital Gains Tax (CGT) has outlined some recommended changes to Capital Gains Tax. The second part of the report is due in 2021.
Changes to UK CGT are likely to be an attractive option to the Chancellor as he looks at ways to reduce the borrowing taken to fund Covid 19 support measures. Here, we’ll share an executive-level breakdown of the changes, followed by a brief overview of how, in our experience, we feel this could impact you.
Well, the report outlines eleven potential changes to the CGT which could raise a substantial amount for the government in increased tax revenue.
The main changes suggested are:
The long and short of it is that, should these changes in CGT be taken forward by the UK Chancellor, many people could end up paying more in tax to the UK government.
Second-Home Owner and/or soon-to-inherit?
This is likely to be the case if you are set to inherit considerable assets, have an investment portfolio and/or a second home.
An increase in the CGT rate (to align with income tax rates) will no doubt result in a much higher liability being faced by those who choose to sell assets which have increased in value.
Coupled with a reduction in the annual exemption, this could present challenges for those looking to efficiently supplement pension income in retirement with funds from an investment portfolio.
The changes to how the CGT and IHT work together could also end up costing you more in tax pay-outs. Currently if you inherit an asset and sell it, the CGT is based on the difference in value between receiving and selling said asset. However, this will be changed, and it will become the difference between the date it was bought and the time it was sold. If this is no longer the case, there is potentially a double taxation issue to deal with, as both IHT and CGT will now be due in respect of the same asset.
Business Owner or Entrepreneur?
For business owner’s Business Asset Disposal Relief / BADR (otherwise previously known as Entrepreneurs Relief), is to be replaced with a system focused on retirement. This is likely to mean an introduction of an age limit, as well as increasing the holding period from two-to-ten years to ensure only those who have spent years building their businesses will actually benefit from the relief. For many entrepreneurs this will be an unwelcome follow on blow from the reduction in the level of this relief from £10 million to £1 million in April this year.
If you are confused about what you need to do regarding these potential changes, or just want some impartial, sensible advice on the best course of action then speak to our professional tax specialists at Everfair today.
Allow us to find the right tax solution for your personal circumstances and set your mind at rest that you are doing the right thing for you, your family and your financial future. ,,https://www.everfairtax.co.uk/contact
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