There is growing speculation that the chancellor Rishi Sunak will change capital gains tax rates in the Budget next month, as he looks to find the money required to cover the government’s unprecedented spending and borrowing during the pandemic.
It comes as no surprise that the chancellor is reviewing the structure of UK taxes, especially in light of the fact that the prime Boris Johnston has already ruled out a return to austerity in public spending.
With government debt at a record high, there has been speculation for quite some time that CGT rates would increase, as part of wider changes to taxation. But some will be surprised at the suggestion that the changes could be introduced after the Budget ‘with immediate effect’.
CGT is generally currently charged at 10% for basic taxpayers, but there are growing calls that it should be increased across the board or possibly aligned to income tax rates – at up to 45% for higher rate taxpayers.
As far as residential property is concerned, CGT is currently charged at 18% on for basic rate taxpayers and 28% on any amount above the basic rate. Higher or additional rate taxpayers pay 28% on any gains from residential property, along with trustees or personal representatives of someone who has died.
Paul Joyce, head of mergers and acquisitions at Mazars in London, said: “We may well see an increase in CGT rates with immediate effect, potentially to align them with income tax rates.”
The government’s tax adviser recently recommended that CGT be overhauled with proposals that could see the number of people hit by the duty increase sharply.
Rishi Sunak, who commissioned the review, is considering proposals by the Office of Tax Simplification (OTS), a Treasury-based body, to reform capital gains tax in the light of the economic and fiscal impact of the Covid-19 crisis.
The move has the potential to bring in an extra £14bn by reducing exemptions and doubling rates, according to the review.
Given the economic impact and ongoing lockdown, it is hoped that any CGT changes will be phased in gradually, rather than in one fell swoop.
Joyce added: “We may well see some signalling of future changes or a more gradual change, potentially beginning at the Budget date.
“We predict an announcement of an intention to change CGT with a date attached would likely encourage a number of owners to begin the process of selling their business, with the intention of realising all, or a significant proportion, of their capital gain ahead of any changes.”
In the last 24 hours it’s been reported that James Blunt has been claiming furlough for 25 staff in his Chelsea business. The same with Mike Tindall even though he employs one member of staff. Being a Royal you would think he could afford to cover one person’s salary?
It’s time to name and shame profitable businesses which are using Government monies. Their actions will result in significant tax rises for everyone, rich and poor.
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Not sure why this comment is relevant here. However much James Blunt is worth (or Mike Tindall for that matter), it looks like they have done nothing wrong (or particularly immoral). Blunt’s pub is shut so he is legitimately allowed to furlough staff. As for his so called ‘worth’, as for many people that ‘worth’ is locked up in property and royalties so not necessarily liquid cash that is immediately available to pay salaries.
Whilst I don’t disagree that some big firms with big bank accounts should be paying back their furlough monies, this particular comment feels like just more sensationalist Daily Mail tosh.
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Presumably you’re using furlough yourself?
My point is that if companies stopped using furlough to shore up profits for directors, in the case of small firms, or shareholders in the case of large firms, my income tax or CGT wouldn’t have to increase.
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I don’t disagree with your point at all, however the two examples you give do not appear to fall into that category. No matter how much ‘wealth’ someone like James Blunt has amassed does not mean that he has the ability to simply continue paying 30 – odd staff every month – that’s just tabloid sensationalism.
I’m not using furlough at all in my business.
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That’s good to hear and same here. I guess I’ve started to lose patience with firms and celebs who are draining public funds when they can afford not to. It’s the spectre of tax rises!
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@ alwaysanagent. When did HRH Mike Tyndall become Royal? He is married to the Queen’s granddaughter which makes him connected by marriage but certainly not Royal. As for either of them being rich personally, that is totally separate from their business accounts.
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His net worth is £16m and you feel this isn’t rich? I should probably call you Sir if you’re richer than Mr Tindall.
I’m sure he can afford to pay one salary for a few months.
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Why should he? His personal account is and should be, separate from his business account. No doubt you dip your hand into your pocket to subsidise your business.
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Yes. It’s called having morals.
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I call it jealousy.
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If this link is allowed, people might like to see my take on this issue here:
Will Rishi dish landlords in his Budget — yet again? | TheArticle
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