Specialist Tax News

Action To Consider Before The Emergency Budget

The next tax e-news will concentrate on developments from the Budget on 22 June. In the meantime you should consider creating a disposal before then of an asset standing at a gain in case CGT rates are increased in line with the Coalition Government agreement as follows:

“We further agree to seek a detailed agreement on taxing non-business capital gains at rates similar or close to those applied to income, with generous exemptions for entrepreneurial business activities”.

The same statement was included in the Queen’s Speech on the opening of Parliament, but with the word “closer” replacing “close”. Whether that subtle change has any significance remains to be seen!

If you own a chargeable asset which stands at a gain, together we should consider the following – with particular attractions where you planned to sell the asset anyway later this year:

ASSET POSSIBLE ACTION
Property Transfer to limited company or trust
Quoted shares Sell. Can buy back if desired, after 30 days. Or immediate repurchase by spouse/civil partner or own ISA
Unquoted shares in trading company No action unless gain over £2 million
Unquoted shares in other company Transfer to limited company or trust

There a number of issues to take into account in making a decision to create a disposal before 22 June:

  1. Stamp duty payable on property (this is 4% on property worth over £500,000; 3% over £250,000 to £500,000; 1% over £150,000 (£125,000 if residential property) to £250,000.
  2. Possible reduction in CGT annual exemption from the current level of £10,100.
  3. The big question is from what date will any CGT increase take effect?

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