Capital Gains Tax (CGT): Radical change on the horizon?

Posted: Nov 27, 2020
Expert:
Liz Gallagher

The Office of Tax Simplification (OTS) has published its first Capital Gains Tax (CGT) report covering policy design and principles underlying the tax. A second report covering key technical and administrative issues is due out in early 2021. This has led many to speculate that changes will be made to the CGT regime in either the March 2021 Budget or at a later Budget in the Autumn. Possible changes include:

  • Increasing the rates of CGT to align them more with income tax rates
  • Making employee share schemes less attractive so that gains are subject to income tax and not CGT
  • Making changes to the relief for the disposal of business assets, now called business asset disposal relief but previously called Entrepreneurs Relief
  • Increasing the rate of tax on surplus cash when a business is sold
  • Reducing the annual exemption under which gains are not taxable                

The recommendations are complex, and it is by no means certain they will be acted upon. We would suggest however that all clients consider these changes alongside any year-end tax planning. We are happy to advise what the recommendations could mean for you, if implemented.

Clients already considering any of the following in the short term may want to move faster and if so, we are ready to assist:

  • Undertaking a transaction in shares i.e. buying out a minority shareholder
  • Putting in place a share scheme or growth shares for employees
  • Selling an investment asset, for example a second property or share portfolio

All HURST Partners are familiar with the report and you should contact your client Partner for more details. You can also contact us at inspired@hurst.co.uk