Pictured above: Craig Simpson
The early days of the new government have signalled swinging
changes to the capital gains tax system - and it's likely that the
18% rate won't last, says leading accountancy firm RSM Tenon -
which has offices in Nottingham, Leicester and Derby.
While statements issued by the government do not set of details
or dates of any changes, an emergency budget has been pencilled in
for 22 June - and is likely to detail major tax hikes.
The current system distinguishes between business and
non-business assets. Disposals of business assets by an individual
can enjoy a rate of ten per cent for the first £2 million of
gains - entrepreneurs' relief - with anything above this level
being taxed at a flat rate of 18%. Gains on non-business assets are
currently subject to tax at 18%.
The government has said it will 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, says Craig Simpson, head of
taxation for the East Midlands, at RSM Tenon.
He said: "These changes to the taxation of gains on non-business
assets will have the greatest impact on individuals and trusts and
may catch people out.
"For example a gain on a second property or investment portfolio
may well see tax rise to a rate as high as 50% from the current
18%. The announcement has caused uncertainty already and I would
expect a rush up to budget day on 22 June for individuals seeking
to lock in the current rate of capital gains tax using a variety of
tax planning methods".
There is more uncertainty for those who hold business assets
which currently enjoy the 10% rate. Whilst it is clear there will
be "generous exemptions for entrepreneurial business activities",
the devil is always in the detail and it is not known at this stage
whether this will be a continuation of the existing £2
million rate or a completely new set of rules which might improve
the position for entrepreneurs.
Craig added: "This type of uncertainty for entrepreneurs is not
ideal particularly for those who may be looking to sell their
business in the short term. My message is take advice now and
consider the options."