Last updated: 22 July 2020
The Treasury have indicated that the review is part of an ongoing process where they review each of the taxes periodically. There was a review of the inheritance tax (IHT) regime last year and to date there have not been any changes made.
There has been much commentary as to what the outcome of the review would entail bearing in mind the need for the Chancellor to raise taxes to fund the COVID-19 relief measures. Currently less than 1% of taxpayers pay any capital gains tax each tax year and capital gains tax raises 1.1% of the total revenue for the Chancellor.
There are two particular areas of interest which could form part of the review:
Firstly, to realign the capital gains tax rates with income tax rates which was last seen in the 2007/08 tax year. This would increase the basic rate band tax from 10% rate to 20% and the higher tax rate from 20% to either 40% or 45% where they are additional higher rate tax payers. The current 8% surcharge for residential property and carried interest could then possibly be removed.
Secondly, at present on death there is an uplift in the base cost of an asset to the probate value for inheritance tax purposes and often there is no inheritance tax due on death, as the probate value is within the inheritance tax threshold. As a result, no tax is due on an asset which may have substantially increased in value if then sold by the beneficiary either on receipt from the estate or shortly after. This could be amended to remove the uplift to the probate value where no inheritance tax is due, so that the beneficiary acquires the asset at the original base cost.
We will be monitoring any further announcements which are expected to be later this year.
Last updated: 22 July 2020
The Treasury have indicated that the review is part of an ongoing process where they review each of the taxes periodically. There was a review of the inheritance tax (IHT) regime last year and to date there have not been any changes made.
There has been much commentary as to what the outcome of the review would entail bearing in mind the need for the Chancellor to raise taxes to fund the COVID-19 relief measures. Currently less than 1% of taxpayers pay any capital gains tax each tax year and capital gains tax raises 1.1% of the total revenue for the Chancellor.
There are two particular areas of interest which could form part of the review:
Firstly, to realign the capital gains tax rates with income tax rates which was last seen in the 2007/08 tax year. This would increase the basic rate band tax from 10% rate to 20% and the higher tax rate from 20% to either 40% or 45% where they are additional higher rate tax payers. The current 8% surcharge for residential property and carried interest could then possibly be removed.
Secondly, at present on death there is an uplift in the base cost of an asset to the probate value for inheritance tax purposes and often there is no inheritance tax due on death, as the probate value is within the inheritance tax threshold. As a result, no tax is due on an asset which may have substantially increased in value if then sold by the beneficiary either on receipt from the estate or shortly after. This could be amended to remove the uplift to the probate value where no inheritance tax is due, so that the beneficiary acquires the asset at the original base cost.
We will be monitoring any further announcements which are expected to be later this year.
