Entrepreneurs’ beware – Capital Gains Tax under review!
Changes to the Entrepreneurs’ Relief scheme were correctly predicted by many advisors last year and in March 2020 the Government announced drastic changes to the scheme (now called Business Asset Disposal Relief). Following the COVID-19 crisis, it would now appear that the whole Capital Gains Tax (CGT) regime will be under attack.
Chancellor Rishi Sunak has announced on Tuesday a review of the UK’s CGT in an effort to reduce the £350bn public spending deficit this year caused by emergency COVID-19 spending.
CGT is a tax paid when disposing of an asset that has increased in value such as shares in a business or a second property. CGT rates are currently set at 10% for basic-rate taxpayers and 20% for higher and additional-rate taxpayers (or at 18% and 28% where gains relate to disposing of residential property).
In this review, the Government will consider increasing CGT in alignment with income tax (20% for lower rate taxpayers and 40-45% for earners of £50,000) and reduce or abolish the £12,300 annual exempt amount.
If you are contemplating a transaction in the short to medium term, whether it is a full or partial exit, there is a strong case to investigate bringing this forward and concluding a transaction within the current tax regime in advance of the Autumn Budget.
Feel free to get contact us on 01491579740 to discuss your particular circumstances.
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