Lisa said, “Everyone expected tax increases after the General Election and they are clearly coming soon.”
Released today, the coalition agreement between the Conservatives and the Liberal Democrats indicates that the rate of CGT on non-business assets is to rise to help pay for an increase in the personal income tax allowance - a Liberal Democrat manifesto commitment. The parties have pledged to increase CGT to “rates similar or close to those applied to income” – in other words, back to 40 or 50%.
Lisa said, “I was relieved to see that the new Chancellor has at least learned the lessons of his predecessor and is not proposing to increase the effective rate of CGT on business assets. The storm of protest that engulfed Alistair Darling when he abolished business asset taper relief clearly showed how important a low rate of CGT is to entrepreneurs.”
It is not certain whether the rate change will take effect from the date of the forthcoming ‘emergency’ Budget, be back-dated to 6 April 2010 or take effect from 6 April 2011.
Lisa said: “Retrospective tax legislation is rare and back-dating the increase would be a very controversial move for the new Government. On the positive side, if the change is not imposed retrospectively, there is now a brief window of opportunity for individuals and trustees. Depending on your personal circumstances, realising latent capital gains on non-business assets so that you pay tax on those gains at only 18% could save you a lot of tax.”
