Capital gains tax changes

The Chancellor's proposals to change capital gains tax have caused a stir amongst business owners who will see the current 10% effective CGT rate on business assets increase to 18% after 5 April 2008. This will disadvantage shareholders of unquoted trading companies, employee shareholders in quoted companies and those disposing of assets used in a business. The potential winners from the Chancellor's announcement are holders of non-business assets, such as second homes, buy to let properties, portfolio investments and beneficiaries of offshore trusts with stockpiled gains. However, where such assets have been held since March 1982, the loss of indexation allowance could still mean you could be worse off with the new lower rate of tax.

Business owners may be able to crystallise a disposal before 5 April 2008 to take advantage of the 10% rate of tax. There may also be ways of "banking" the indexation allowance earned to date by taking action before 5 April.

Contact us for further information on the changes, and how they may affect you.