It is widely anticipated that the budget next month may result in big changes to CGT. The Office of TaxSimplification (OTS) has previously produced a report on suggested changes to capital gains tax for individuals and trusts.
Amongst the changes they proposed were the following;
The rates of capital gains tax and income tax should be much more closely aligned
• The annual CGT exemption may be further reduced
• The capital gains tax uplift valuation on death should be abolished. Instead, they proposed that the beneficiary receiving the asset should be treated as acquiring it at the historic base cost of the deceased
• Business asset disposal relief (previously entrepreneurs’ relief) should be focused on retirement and not for entrepreneurs who had previously invested in businesses and shares.
There are also considerable rumours that the government plan to reduce the availability of main residence relief on the disposal of an individual’s house or flat. These proposed CGT changes will considerably add to the complexity of calculating and administering CGT, rather than simplify it. If you are considering selling an asset which is likely to result in a CGT liability, taking advice is of paramount importance.