News

The chancellor announced in his pre budget report a change in the rate of taxation on capital gains. It is indicated as a simplification, with the introduction of a flat rate of 18% on all gains, with effect from 6th April 2008.

There will be winners and losers, as in all tax changes. If you dispose of a qualifying business asset after two years of ownership the effective rate of tax is 10% on the gain. Currently the minimum effective rate of tax on non business assets, after 10 years of ownership is 25%. From this the winners will be higher rate tax payers disposing of non business assets, with the losers being any tax payer disposing of business assets and basic rate tax payers disposing of non business assets after 6th April 2008.

One further relief, which is being removed is indexation, which up to 5th April 1998 took account of the increase in the retail price index. This effectively means taxpayers will be paying tax on inflation.

If you are considering disposing of assets within the next 6 month we would suggest you should talk to us.