Copy article

Investors selling assets ahead of CGT changes

Journalist: Rachel Mortimer, The Times

ended 24. March 2023

Looking to speak with financial advisers and accountants about investors selling assets to get ahead of CGT allowances shrinking and the threat of a new government increasing the CGT rate, such as the plans mooted by Labour this week to bring it in line with income tax. 

Are your clients concerned or cautious about potential CGT changes if Labour wins the next general election? Have they acted to sell assets and manage tax now? 

Thank you! 

 

4 responses from the Newspage community

Copy all

Copy

Editor
Samuel Mather-Holgate
Independent Financial Adviser at Mather and Murray Financial
Lots of clients are crystalising gains ahead of the end of the tax year. This is usually good practice anyway, to ensure you have fully utilised your capital gains tax allowance. Beware not to fall foul of the re-investment rule, where you cannot buy the same asset back within 30 days. Clients with larger gains will also be considering crystalising taxable gains ahead of a general election. Although the Tories have been harsh with the reduction of the CGT allowance, it is thought Labour might offer a more generous allowance, but a higher tax percentage making it much more expensive for those who have significant gains to realise.
Copy

Editor
Scott Gallacher
Director at Rowley Turton
Tax-efficient strategies are always on our clients' minds, especially with the possibility of a Labour government and higher taxes. To stay ahead of the game, we're already helping clients sell assets this tax year to utilise their CGT allowances before the reduction next year. Our job is to help clients make informed decisions and plan for the future.
Copy

Joshua Gerstler
Chartered Financial Planner at The Orchard Practice
"We always try to manage our clients investments so that they make use of the annual Capital Gains Tax allowance, which is £12,300 in the current tax year. It is disappointing that this is being cut although the impact is not substantial. In 23/24 the extra CGT payable on investments for a higher rate tax payer will be £1,260 and an additional £600 in 24/25. So the overall impact on those making gains above the allowance is not too large. There is concern among our clients that a Labour government will put up tax rates and make it more difficult for the diligent investors to make a profit."
Copy

Sam Hart
Partner at Claritas Tax
There has been talk of increasing the rate of CGT for some years, but if aligning rates with income tax, there would also need to be some allowance for inflation reintroduced. In past years we have had indexation allowance and then taper relief to account for the fact that, owing to inflation, assets will rise in value in absolute terms even if in real terms their value has not changed. Currently, taxpayers pay tax on the full value of a gain, including an inflationary increase, which is perhaps acceptable owing to the lower rates. If the rates were to increase this would become a key issue.

At Claritas, we saw significant activity from entrepreneurs in advance of the March 2021 Budget, many of whom were looking for ways to crystallise gains now to lock in the 20% CGT rate in case of an increase. However, for now it seems that business is cautious, but looking towards the next election as being the deadline for taking action to mitigate tax on gains