Possible changes to capital gains tax – beating the Budget

Partner Mark Williams discuss possible changes to Capital Gains Tax (CGT) in the next Budget.

Ever since the Chancellor, Rishi Sunak, commissioned a review into Capital Gains Tax earlier this year, rumours have been spreading of potential changes to Capital Gains Tax (CGT) in the next Budget.  Although there is always speculation before a Budget that taxes will be increased, with the vast spending by the Government over the last 8 months in light of the Covid-19 pandemic, it is almost inconceivable that there won’t be tax increases as a result of the next Budget.

So far as CGT is concerned, the rumours are focused on the possibility that CGT rates may be brought in line with income tax rates which, if enacted, could potentially double the tax payable on capital gains.

Therefore, now is the time to explore avenues available for tax mitigation particularly if you are looking at selling your business.  CGT is a tax on a gain or profit made when selling an asset and therefore if you have been planning on selling your business in the next few years, it may be prudent to accelerate your plans or to look at the structure of your company including ownership of shares to make the best possible use of the available CGT exemptions.

We have also seen an increase in the use of Employee Ownership Trusts (EOTs) which offer generous tax reliefs to encourage shareholders to sell a controlling interest in their company to an employee trust which acts in the interest and for the benefit of the employees.  EOTs are likely to become even more attractive if the next Budget introduces changes to the CGT regime as rumoured.

If you wish to discuss the possible sale of your business or would like further information on EOTs please do not hesitate to contact Mark Williams:

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