Chancellor, Rishi Sunak, has recently outlined plans for a review of Capital Gains Tax (CGT) for individuals and smaller businesses.
Commentators are seeing the move as an attempt by the Chancellor to raise funds for the recent Coronavirus support measures for businesses, as well as the Stamp Duty holiday and VAT reductions announced in the summer statement.
While it’s likely to be some time before the results of the review are finalised and published (more information about the process can be found here), it would be wise for individuals and businesses to plan ahead now for any increase in CGT that the review may recommend.
The reasons behind the review
Explaining the thinking behind the move, the Chancellor said: “I would like this review to identify and offer advice about opportunities to simplify the taxation of chargeable gains, to ensure the system is fit for purpose and makes the experience of those who interact with it as smooth as possible.
“In particular, I would be interested in any proposals from the OTS (Office of Tax Simplification) on the regime of allowances, exemptions, reliefs and the treatment of losses within CGT, and the interactions of how gains are taxed compared to other types of income.”
Should you accelerate your business sale?
There is a significant chance that the review will recommend an increase in the rate of CGT. Many business owners who are planning on selling their business in the years ahead should consider whether to accelerate these plans with a view to completing them before a potential increase in CGT.
Looking beyond business owners, a rise in the rate of CGT would also have implications for the financial plans of individuals who hold any assets, the sale of which is subject to CGT.
If you’re a business owner or an individual who would like some advice on planning for a CGT increase, or any other element of your financial and tax planning, please get in touch.
This article is for educational purposes only, is the opinion of the author and should not be relied upon or construed as advice. We strongly recommend that you consult a tax specialist or other financial or legal professional before making any financial decision, as they will consider your particular objectives, financial situation, and your individual needs before making a recommendation personal to you. Any reference to tax in this article is based on our understanding of current UK legislation, which is subject to change at any time.