Gerry MacCrossan
As speculation builds around potential changes to Capital Gains Tax (CGT), many are questioning whether the tax landscape might revert to past policies, including the possibility of taper relief. There is hope that Business Asset Disposal Relief (BADR), or a similar incentive, will be retained to encourage entrepreneurship and growth. As we await official announcements, there are several key areas of CGT worth keeping an eye on.
Some potential changes to CGT to watch for include stricter rules on private residence relief and tweaks to hold-over relief for transfers in and out of trusts. A more controversial change could be the removal of the CGT-free uplift on death, meaning beneficiaries would inherit assets at the original CGT cost rather than the probate value. This idea, previously put forward by the now-abolished Office of Tax Simplification (OTS), could have a significant impact on how inherited assets are taxed.
Should you consider bringing forward asset disposals before budget day?
While CGT changes usually take effect from 6 April, there have been instances of mid-year adjustments in the past. This possibility has prompted many taxpayers to accelerate asset disposals to take advantage of current rates. Remember, for CGT purposes, the disposal date is the date of the unconditional exchange of contracts. However, anti-forestalling measures may be introduced to prevent artificial attempts to bring forward disposal dates. There’s still time to sell listed investments before 30 October, however, selling assets like businesses or properties typically takes longer unless a buyer is already lined up.