I recently made a post about the changes to Capital Gains Tax rules, what I refrained from doing was going into any depth, my reasons, well several fold, firstly because tax planning is something that should always be undertaken before panicking over changes to tax rules/legislation, and secondly, because there had been such a concerted response from industry that I thought it was better to watch and see.
Well I was right, the new Chancellor met with business group leaders this week who expressed their anger feelings towards the changes, and no doubt hoping to force him to do a U-turn.
We now hear that the Chancellor is totally committed to the changes, and will not be making a U-turn, well a bit hard to make a U-turn and save face when its your first pre-budget report isn’t it.
Additionally, the Chancellor has told the House of Commons this week that he announced these changes in order to simplify tax matters, as it will now enable taxpayers to make their own calculations and not seek professional accountants for advice, that’s nice of him, thinking about the taxpayer, oh hang on, surely the accountants would earn their fee by giving the taxpayer tax advice thus resulting in tax savings? Oh now I get it, what he meant was he can collect more tax this way by keeping the taxpayers away from the advisers.
Mind you, simplification of the UK tax system like this would be good, hell, as someone who has to deal with it, I would welcome it, and unfortunately as with any changes there will always be winners and losers, that’s just a fact of life, and bye the way, if you think you are a loser contact your advisers today and get them to advise you, don’t panic just because industry leaders are shouting it’s all gone wrong!
Richard Murphy suggested some, and I my humble opinion, very good and well reasoned alterations to the application of the newly proposed 18% capital gains tax charge, and they really are good!
The Chancellors changes to the current Capital Gains Tax rules are certainly heading down the simplification route, but these alterations are not without having their own implications, and as good as the amendments Richard has suggested are, they would add a level of complexity, although not nearly as much as we currently have.
So where to from here? Here we have a new Chancellor who has come out with a revision to the tax system, one that moves towards simplification, in itself not a bad idea, but this simplification has far reaching implications, and not all of them good, think SAYE scheme members! And maybe that’s the problem, it’s too simple, and our global society is such that simplification can happen, but made simple can’t, as there needs to be a degree of complexity to ensure flexibility?
Here is my worry, here we have another government official meddling in the tax system, and they really shouldn’t, as in part it’s in the mess it is thanks to them, and as they do this it impacts on the lives of so many ordinary people, and not for the better, so where to now, what else are we going to see from our new Chancellor?
Alistair, please go and take some guidance from tax experts before you make anymore changes, hell, if you have to, phone Richard, but not me as I’m busy at the moment 
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Erika Holden (Who am I?)
2 years ago
With regard to the capital gains tax reforms the flat rate does make it simpler to calculate the tax charge on the sale of assets. I used to have accountants asking me how to calculate the chargeable gain so what hope did the layman have? An ex colleague of mine was actually pleased with the reform because it will make his calculations for the tax returns much easier.
Those with non business assets such as buy to lets will be happy as their tax position on a future sale will be much better.
The people needing advice are those who are looking to exit out of their businesses over then next five years or so and who would currently benefit from business asset taper relief. Also clients may consider combining some succession planning with the protection of taper relief.
Anyone who has disposed of assets at a rate greater than 18% in this tax year may wish to take advice on how they may be able to benefit from the new 18% instead of the rate they are paying.
However it is important not to let the ‘tax tail wag the dog’. I have heard of suggestions in the professional field involving passing large amounts of money to other individuals such as girlfriends pre marriage. Given the option of paying an extra 8% tax or lose everything should my girlfriend with her now inflated bank account decide that actually she doesn’t want to marry me, I would pay the extra 8% every time (if I was a man!).
There are solutions available for clients willing to take professional advice on how to arrange their tax matters in an efficient manner. Just be careful though that the suggestions that are being put forward to you are sensible ones!
Jason Holden (Who am I?)
2 years ago
It sounds like some in the profession are panicking, my advice to these clients, take proper (better) advice before acting.
And remember, at worst this is only an 8% additional tax bill, you still keep the other 82%!
As I said, there are winners and losers, not fair, but life.
Robert Moore (Who am I?)
2 years ago
In our line of work, which is listing companies for sale, the new CGT rules are very important. However, I would agree with Jason that it is important not to panic as concentrating on the transaction is paramount and trying to make sudden changes in response to Govt policy could upset things.
Jason Holden (Who am I?)
2 years ago
Thanks for the comment Robert. I know it has been said before, but the old adage ‘don’t let the tax tail wag the dog’ still holds true.