The proposed changes announced
in the Pre-Budget Report to the capital gains
tax (CGT) system are radical. Taper relief
for CGT will be abolished for disposals on
or after 6 April 2008. Other changes to the
CGT system include introducing a flat rate
of CGT of 18% and abolishing indexation, an
allowance for inflation.
Last month we reported that the Chancellor,
Alistair Darling, had said at the CBI conference
that he would ‘publish final proposals’ in
December 2007. There have been many rumours
of changes to the proposals including the introduction
of some form of retirement relief, with the
figure of £100,000 being mentioned by
several sources.
Alistair Darling has now said that final proposals
will not be issued before the New Year, which
has disappointed many, as it gives little time
to plan effectively before the introduction
of the new rules.
On 17 December 2007 the Director General of
the CBI, Richard Lambert, expressed disappointment
at the Chancellor's decision to postpone an
announcement.
Richard Lambert said:
‘We are glad that the Chancellor is paying attention to the submissions
he has received from the business community, but he needs to get on with this
decision urgently, as he promised at the CBI's conference a fortnight ago.
People need to be able to make decisions about
their businesses - whether to invest, or whether
to sell up. This uncertainty mustn't be allowed
to continue.’
The proposed changes will generally increase
the amount of tax payable by individuals who
own assets that currently qualify for full
business asset taper relief but everyone has
different costs and entitlements to reliefs,
so it is difficult to speak in generalities.
If the government does introduce a form of
retirement relief then it may be beneficial
to retain business assets and dispose of them
on or after 6 April 2008 depending on the amount
of the relief, the conditions which have to
be met and how it is calculated.
We will continue to keep you informed of developments.
However if you have any concerns please do
get in touch.
Internet link:
CBI
press release |
