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The new Government's proposals for Capital Gains Tax

The new Government’s coalition agreement published this week announced that forthcoming tax measures will include an increase in the current 18% rate of capital gains tax (CGT), to bring the tax more into line with income tax rates. This could potentially result in a CGT rate of up to 50%, although the agreement states that the increase will not apply to business assets and that there will be generous exemptions for entrepreneurial business activities.

The extent of exemptions and what will qualify as business assets is not yet known nor is it clear when the new rate is to be introduced. While it is quite likely that the increase will become effective from April next year it would be foolish to rule out the possibility of it coming into effect from the date of the emergency budget which is expected within 50 days of the new Government taking office. This may mean there are now only 48 days in which to realise capital gains to avoid what may well prove to be a significant tax increase.

One certain way of crystallising gains is to sell assets. There are, however, techniques available for 'locking in' gains at 18% before budget day.

If you are already planning to dispose of assets with latent gains or wish to consider options available to you to avoid paying more CGT in future, please contact Turcan Connell’s Director of Tax Services Ian McGowan on 0131 228 8111 who will be happy to provide advice and guidance on the matter.
 

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