Following the first (and highly anticipated) report from the HM’s Treasury Office of Tax Simplification (OTS) that the government should look at aligning Capital Gains Tax rates (CGT) with Income Tax rates; we’re taking a look at what the latest announcement means for High-Net-Worth individuals (HNW’s) and business owners alike.
The initial fears are that the report is discouraging taxpayers, particularly family-run businesses from disguising their income as capital gains. Currently, it is possible (in some circumstances) to reclassify businesses income as capital gains, so it is taxed at a lower rate. However, despite initial fears, it looks like the government isn’t taking a particular swipe at any one party in the short term. The report makes 11 recommendations, looking at everything from lifetime gifts to inheritance tax, and reliefs given on business assets.
Now the report is produced, it appears HM Treasury is looking to the government to make the policy changes outlined in the document. Focusing predominantly on the long-term benefit that this could provide the economy in helping to pay back the hefty debt to the Bank of England, which has developed throughout the COVID-19 pandemic (take a read of our article from December 2020, on how the UK is going to pay for Lockdown).
It is essential to add that this initial report is also expected to follow with another report early this year, looking at the administrative and technical issues, which will be extremely interesting to see. However, there are warnings from tax experts across the media that this initiative is incredibly short-sighted and won’t go far enough in plugging the hole caused by Lockdown.
It is also important to note that in most cases, people do not need to pay Capital Gains Tax. However, as mentioned in the report ‘when they do, they often have to pay large amounts…
So, if you would like to get in touch to discuss your situation or how any changes to the legislation could affect you, please get in touch at [email protected] or +44 (0)1444 715200
This article is for general information and is not intended to address your particular requirements. No individual or company should act upon such information without receiving appropriate professional advice