The Coalition’s “Programme for Government” sets out its plans to reform the tax system. As was widely anticipated it included an overhaul of the Capital Gains Tax regime.
It is proposed that Capital Gains will be taxed at rates ‘somewhere near or close to those applied to income’. Exactly how the mechanics of this will work is not clear at this time. However, it is likely that we will revert to the pre April 2008 regime, where chargeable capital gains sat on top of your income. What is certain is that for some the rate of tax payable will increase from 18% to 50%.
It is important to note that there will be ‘generous exemptions for entrepreneurial business activity’. What is defined as entrepreneurial business activity or if the relief is as generous as the current Entrepreneur’s Relief remains to be seen.
Details of the new regime will be announced in the emergency budget scheduled for the end of June.
If you are considering making any capital disposals in the near future we recommend you call us now, as the timing of the disposal may make the difference between paying 18% or 50% tax.