No changes to Capital Gains Tax in the Budget
Despite all of the speculation of a predicted hike in rates of Capital Gains Tax (CGT) to bring it more in line with income tax rates in today’s Budget, Chancellor Rishi Sunak has not changed these rates or reduced the annual exempt amounts from current levels.
This does not mean that these rates will not be changed in the not-so-distant future, especially given the fact that the Chancellor commissioned a review into CGT by the Office of Tax Simplification last year, with the second report to be published sometime this Spring.
The Office of Tax Simplification have also been looking into Inheritance Tax (IHT) in recent years which has a number of overlapping tax reliefs with CGT. Following the second report being published later in Spring, there is inevitably going to be a big overhaul on both CGT and IHT in the future.
For the time being, we at least know that CGT rates are staying at the same levels for the upcoming 2021/22 tax year and this provides us as tax advisers along with our clients, a period of continuity and stability, where we can assist in tax and financial planning.
CGT is a tax on the profit (gain) you when you sell or dispose of a chargeable asset. The current rates are 28% for residential property and 20% on gains from other chargeable assets if you are a higher or additional rate taxpayer. If the gain is within your basic rate income band, the rates are 18% for residential property and 10% on gains from other chargeable assets and you will pay the higher rates on the part of the gain above the basic tax rate band.
The annual exempt amount of £12,300 will remain frozen until April 2026.
If you would like to discuss CGT with one of our advisers, then please get in touch with us
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