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Capital Gains Tax Will Be A Target In The Next Budget

07 June 2010

Capital Gains Tax will be a target in the coalition Government’s budget on June 22, warns Kent lawyer Harvey Barrett.

Harvey, partner and head of private client, trusts and estates at leading regional law firm Furley Page, explains: “Capital Gains Tax is payable when you dispose of a chargeable asset so if you have assets heavy with gains it’s crucial that you review your affairs before the budget and find out how you can minimise your tax bill.

“Any changes announced in the budget could take place immediately, giving us no further notice to plan, or come in with the new tax year on April 6, 2011. It’s unlikely that it will be retrospective, though.”

Since April 2008 we’ve been spoilt, relatively speaking, with a CGT rate of 18%. Prior to that, capital gains were taxed as an extension of our taxable income with the highest rate of tax being 40%.

Some assets are exempt - such as cash and classic cars - but many aren’t, probably the most common of which being land and property (located anywhere in the world) and shares.

Everyone has an annual allowance deductible from gains – currently £10,000. Some relief is available, say on the disposal of your main residence or of business assets.

Harvey cites the example of someone who owns a holiday home in Cornwall which they bought for £10,000 and which is now worth £250,000. If they were to sell it now the CGT bill would be around £25,182. If the Government changes the tax rate to bring it more in line with income tax rates (the highest being 40% and 50%) that tax bill could more than double.

For further information on Capital Gains Tax contact Harvey Barrett on 01227 763939.
 

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