This is not a political blog, but it is important that I highlight some of the discussions about potential tax changes amongst the politicians. We all know that politicians can talk a lot of hot air, but on occasion the odd policy gets made that can have significant impact on clients. The recent round of political conferences saw the LibDems mull over tax hikes and in particular proposed increases in capital gains tax (CGT).
CGT problem for landlords
They have given thought to a top rate of capital gains tax of 45% – which would depend on your other income. This would restore capital gains tax rates to previous approaches, which linked the rate payable to your other income. This could have a significant impact on landlords and investors nursing significant CGT gains. They also mooted a reduction in the CGT allowance from £10,900 to £2,000. This is possibly because so few people actually pay CGT.
General Anti Abuse Rules
The least contentious tax plan (by any party at present) is the strengthening of the General Anti Abuse Rules (GAAR) which aims to ensure that loopholes are not exploited for tax reductions that go against allowances and the spirit of the rules. This does not mean an end to pension tax relief or ISAs – these are carefully manipulated (sorry, crafted) allowances used to incentivise saving.
Dominic Thomas: Solomons IFA