Capital Gains Tax Changes
p2 years ago, the chancellor simplified a title=Capital Gains Tax href=http://www.mulburyhamilton.co.uk/capitalgainstax.html target=_blankCapital Gains Tax/a (CGT) by sweeping away various reliefs, including indexation and taper relief, in return for a low flat rate of 18 per cent. It was too good to last. Now it looks as though wersquo;re going back to something more like the pre-2008 system, with a title=Capital Gains Tax href=http://www.mulburyhamilton.co.uk/capitalgainstax.html target=_blankCGT/a rates ldquo;similar or end tordquo; the income tax rates of 20 per cent, 40 per cent and 50 per cet. But we do not as yet have details of how the new regime will work ndash; these will be announced in the emergency budget, which is on June 22./p
pnbsp;/p
pstrongWhat assets will be affected? /strong/p
pWe know that the new rates will apply to ldquo;non-business assetsrdquo;, a category that includes buy-to-let properties and second homes, as well as other investments. To sweeten the pill, the Government could bring back taper relief or something similar. This rewarded long-term ownership by gradually reducing the tax on assets owned for three years or more before sale. But with reducing the deficit their main priority, they may choose not to introduce new reliefs./p
pnbsp;/p
pstrongWill the yearly exemption survive at current levels?/strong/p
pAt present, every person has an annual exemption of pound;10,100 ndash; only gains over this amount are taxed. The Liberal Democrats would like to reduce the annual tax free gain to only pound;1,000. Will they get their way? The Coalition Agreement makes no mention of any change to the allowance./p
pnbsp;/p
pstrongWhen will the changes take effect?/strong/p
pWe donrsquo;t know when the increase will take effect. It would be difficult to have dissimilar rates in one tax year, so the best guess is that the new rates will apply from 6 April 2011, giving people time to sell at the old 18 per cent rate./p
pFor more on Capital Gains visitnbsp;http://www.mulburyhamilton.co.uk/capitalgainstax.html/p
