Pictured above: Nigel Reynolds
Birmingham accountancy firm is warning the regions business and
property owners to avoid 'panic selling' property portfolios, in
light of the proposed increase in Capital Gains Tax (CGT).
The accountancy and tax advisory specialists are advising
business and property owners to be patient and hold on to assets
and second homes, as they could risk losing more on the sale of
properties - than the additional tax being proposed.
It comes after the new coalition Government continues to
consider increasing capital gains tax on non-business assets, such
as shares and second homes.
"At the present time we do not know what the changes to the levy
will be, it has been reported it could increase to 40 per cent or
even 50 per cent. However, it has also been suggested the new rate
could be below 40 per cent, and could be set in line with the 20
per cent basic rate of income tax.
"As ministers continue to consider options and decide the fate
of CGT, we would strongly advise the business community to hold off
impromptu selling, as the loss on sale, due to property prices
continuing to fall, could significantly outweigh the proposed tax
increase", commented Nigel Reynolds, Founder and Principal of
Reynolds and Co.
The family-owned accountancy firm is reminding the region that
CGT only arises on the sale, or disposal of an asset and the rate
can reduce as well as increase.
Mr Reynolds said: "So unless individuals need to sell, then it
would be a better option to continue and hold on to a property
until prices have risen again. In five or ten-years time when the
Country's debt is hopefully behind us, or more manageable, then the
tax rates may reduce."
Reynolds and Co believe there is no certainty that the changes
to the CGT rate will not be backdated to either the General
Election or the start of the tax year.
It hopes the Chancellor of the Exchequer, George Osborne will
make changes to encourage long-term investment.
"We believe such a move would then only penalise those who only
hold assets for say up to four- years and progressively reduce the
tax burden down to the current 18% where they are held for
ten-years or more. This would curtail the current tax
avoidance schemes which move income to gains and at the same time
return to rewarding long-term investment," added Mr Reynolds.
Reynolds and Co specialise in accountancy (including Solicitors'
Accounts Rules), taxation and business advisory services. This
includes Management and Business Services, Business Start Up
Support, Tax Management and Tax Returns Support, IT Support and
Payroll and Booking Keeping Services.
The firm is also a member of the ACCA, the largest global body
for professional accountants - with 140,000 members of the
accredited body across the World.