What could the proposed Capital Gains Tax review achieve?
21st August 2020
Rishi Sunak, the Chancellor of the Exchequer recently wrote to the Office for Tax Simplification (OTS) to ask them to review the current capital gains tax (CGT) rules. He wants the OTS to establish CGT is still fit for purpose in relation to individuals and smaller businesses and, if possible, find ways to simplify the rules.
As part of the review, the OTS has launched an online survey to help them collate what individuals, businesses and professional advisers really think about CGT and its complexities.
If you’d like to put forward your thoughts, you can complete the survey here.
There is a lot to be said for simplifying CGT (as there is, to be honest, for simplifying the entire UK tax regime).
Because of COVID-19 the current economic climate and the resultant explosion in government borrowing, it is very likely that the existing and, arguably, low rates of CGT will be raised, quite possibly to match an increase in income tax.
And, if we tie the CGT review in with the review of inheritance tax (IHT), the most obvious question to ask is whether the CGT review will recommend that the capital gains uplift on death should be scrapped, particularly if there is already an IHT relief on the deceased’s assets?
Such moves would have a headline grabbing simplicity. After all they’d be easier to sell to the public if they were in essence asking the wealthier sections of society to pay their ‘fair share’ of the costs of the pandemic.
Our feeling is these reviews could just be the tip of the taxable iceberg and a reappraisal of principal private residence relief and amendments to or even the abolishment of Business Asset Disposal Relief (formerly known as Entrepreneurs’ Relief) could well be next.
As the tax regime is so volatile at the moment it is more crucial than ever that you make sure you seek out the best possible advice from an experienced tax adviser. If you would like to discuss any aspect of your own personal tax position, please call us on 0116 2827000 or email us at email@example.com and we’ll be more than happy to help.