- The importance of planning for Capital Gains Tax now
The importance of planning for Capital Gains Tax now
The importance of planning for Capital Gains Tax now3rd December 2020 - Published by Kuits tax & estate planning team
Currently gains on the sale of assets are taxed at 10% or 20% , or at 28% if it is a second home. However, a recent report from the Office for Tax Simplification has suggested that these tax rates should be scraped and the gain be added to a person’s income (watch our Tax team’s video update on this here). This could mean that gains would be taxed at 40% or even 45%, double the current rate. Whilst this would raise funds, estimated at £14 billion, to cover the government’s much needed COVID initiatives, this will come as a blow for business owners and property investors hoping to sell assets in the future.
The report also suggests that the current rule where a person inherits assets at the value at the date of death is scrapped and instead a person will inherit the asset at the value the deceased purchased it. This could mean that as well as paying Inheritance Tax on the death of the person, the beneficiary will pay Capital Gains Tax as well – resulting in a potential tax rate of 80% on an inheritance.
Despite this, there are things you can do currently to mitigate Capital Gains Tax, such as bringing forward a sale or transferring assets into a trust or company structure, but it is important to get specific advice on your personal situation as without expert advice, you could create more problems than you solve.
Get in touch with a tax lawyer in Manchester
If you would like advice on anything mentioned in this article, please call specialist tax partner Paul Bricknell on 0161 838 7860 or email firstname.lastname@example.org.