Tax Tips

Capital Gains Tax

TT331: Capital Gains Tax (“CGT) planning opportunities in anticipation of increased rate of CGT – 1st October 2020

The press has been rife recently with speculation that rates of taxation and in particular CGT are set to rise imminently to fund the costs of Government support for the economy during the COVID-19 pandemic.


The November budget has been abandoned in favour of a March 2021 budget so it is unlikely we will know what the Chancellor has in mind for tax rates but we do know that CGT reliefs have already been reduced.


In his last Budget (11 March 2020) the Chancellor reduced the lifetime limit on Entrepreneur’s Relief (now renamed Business Asset Disposal Relief – “BADR”) from £10m to £1m. As such, only £1m of gains on a share disposal would now be taxed at 10% with the balance of any gain being at 20%.


In view of reduced BADR and uncertainty over the tax rate, business owners (particularly those likely to want to sell in the next few years) will want to consider the ways to mitigate against future increases in rates of CGT.

HMRC

IR35 changes 2020: why new HMRC tax rules confirmed in the Budget are feared by self-employed workers

New rules on how contractors and freelancers are viewed by HMRC could leave many worse off!

As of the 17th March 2020 the Chancellor, Rishi Sunak, announced the IR35 reforms will be delayed for a year in response to the coronavirus pandemic.

Tens of thousands of self-employed workers are facing a higher tax bill as HMRC tightens the net on IR35 – a complicated piece of legislation designed to crack down on a tax loophole used by self-employed individuals operating through a company.

In April, many more workers will come under the umbrella of IR35. It means self-employed people who work for a company like an employee may have to pay the same level of tax that permanent members of staff pay. The changes will bring in £3.1bn in additional tax revenues between 2020 and 2024, according to HMRC.

However, many self-employed workers are concerned that businesses will find the changes to off-payroll working rules too complicated and they will suffer as a result.

Selling Property

Selling property

When you sell a property or a building plot, you need to consider the tax implications. In most cases, your main residence is exempt from tax. However, there are a number of cases which might require some further thought, such as: • If you have more than one property, such as a holiday home, or a rental property • If you have a large garden (more than 0.5ha) • If you have periods when you haven’t occupied the property, including a delay in occupation, for example, if you were building the house • If you have also used your home for your business Although there are some reliefs available on the sale of properties, a charge to Capital Gains Tax (CGT) can still sometimes arise. There is sometimes planning which can be undertaken to mitigate any tax, for example, making main residence elections or converting a rental property to a furnished holiday let. Concerned about the tax implications of selling your property? Contact us!