It is widely expected that Rishi Sunak’s next budget, anticipated to be sometime in March 2021, will involve increases to taxes in order to fund the government’s COVID support measures. It is speculated that this is more than likely to involve an increase in Capital Gains Tax (CGT) rates, which is the tax payable when you sell assets including shares and property. Rishi Sunak has commissioned various reports exploring ways to change the Country’s tax regime, the first of which has just been published.
It is unsurprising that CGT is a key feature of the recommendations of the report which include aligning CGT and income tax rates, reducing the annual exemption for CGT, completely abolishing Entrepreneurs’ Relief and abolishing or reducing the scope of other incentives and reliefs such as EMI options, which give CGT incentives to employees relating to shares they hold in their employer, and investors’ relief.
What can I do?
There may be steps you can take if you act quickly to mitigate the impact on you of any such increase to CGT and to take full advantage of the current 10 and 20% CGT rates (the Office for Tax Simplification has now suggested these rates could be scraped. Read more from our Tax team here). This is especially the case if you were already contemplating selling or transferring assets in the near future, be that to third parties to realise value, or to the next generation to facilitate the succession of your business. These actions may include:
- Making sure your planned company, business or property sale completes before the next budget to crystallise your gains before any increase takes effect;
- Utilising CGT free structures like ISAs and pensions for your investments including selling and reacquiring assets in ISAs and pensions;
- Transferring assets to spouses or civil partners;
- Seeking to agree with purchasers in relation to deals that have already taken place, the acceleration of the payment and therefore the gain on any deferred consideration (including preference shares) received for sales of assets that have already completed.
Get in touch with a corporate solicitor in Manchester
What is possible and effective for you will depend on your personal circumstances and the assets involved. We can guide you through your options and implement any sale or restructuring process quickly and smoothly to meet the timescales required.
Please contact Corporate Senior Associate Helen Mather on 0161 838 8183 or email helenmather@kuits.com.
