With Government debt approaching £400 billion it seems likely that tax increases may be included in the Budget due on 3rd March. Those wishing to make gifts to family members may need to consider how any changes could affect their plans or impact longer term inheritance.
In December the self-styled Wealth Tax Commission made up of academics from the London School of Economics and Warwick University proposed a one -off wealth tax of 5% on all personal wealth for individuals with £500,000 or more. https://www.lebc-group.com/news-and-views/wealth-tax-proposals-target-middle-aged-savers-
Rishi Sunak rejected the idea of a new wealth tax earlier in the year. It seems more likely that tax increases will arise on capital gains tax and inheritance tax. Moreover, the Office of Tax Simplification (OTS) has set out proposals for reform of these taxes.
The Proposals Made to Government
Capital Gains Tax
Capital gains is levied on the capital profits made, less costs and allowable losses, when selling or gifting capital assets such as land and buildings or shares. There is an annual allowance of £12,300 per person so that tax is only charged on net gains, when sold or gifted, if above this. But the annual allowance is available on a use or lose it basis.
There is an exemption on transfers between spouses and civil partners who can double up on the annual allowance by transferring assets prior to disposal.
On death any gain inherited is “uplifted” so that the inherited asset has a base value for capital gains as at the date of death. This rule is often a reason for investors to adopt a long term buy and hold strategy.
On Capital Gains the OTS would: -
Things to Consider
We will be monitoring the Budget and updating our advice in the light of any changes. If you would like advice in the meantime, please contact your usual LEBC adviser or firstname.lastname@example.org or call 0800 055 6585.
Public Policy Director
Please remember, no news or research item is a recommendation or advice to buy. LEBC Group Ltd is not responsible for accuracy and may not share the author’s views. The contents of this blog are for information purposes only and do not constitute individual advice. All information is based on our current understanding of taxation legislation and regulations. The Financial Conduct Authority does not regulate estate planning, tax advice, wills or trusts.Back to News & Views