As Chancellor Rishi Sunak explores options to cover the costs of the pandemic, the amount of tax levied on capital gains could be raised by approximately £14 billion.
Although the Chancellor previously assured MPs that there would not be a "horror show" of tax rises, the Office for Tax Simplification (OCT) confirms that capital gains tax (CGT) could be doubled if it were brought in line with income tax.
Currently the CGT rate is 10% for basic-rate taxpayers and 20% for higher-rate taxpayers, and is the tax paid on profits and gains that are made when assets, shares or property owned are sold, given away or disposed of.
The OCT have said that the difference between CGT and income tax rates are "counter-intuitive" and can encourage taxpayers to structure assets and affairs in ways that re-characterise income as capital gains with a view to minimising tax.
If exemptions are cut and rates are increased, the Government could raise approximately £14 billion.
If you own a business or a portfolio of assets, you may need to re-evaluate your portfolio and business structure and discuss with your accountant any implications of the proposed tax increases.
If you would like to discuss further, please contact a member of our team.
Chancellor Rishi Sunak looks for ways to cover the enormous costs of the Coronavirus pandemic