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In his Pre-Budget Statement this month the Chancellor Alistair Darling announced major changes to CGT due to take effect on 6 April 2008.
If you are in the process of making disposals or are likely to do so in the near future, you need to consider whether your tax position will be significantly different if the transaction is completed before or delayed until after 6 April 2008.
From that date, all capital gains will be charged at a flat rate of 18%. That sounds lower than the current system of charges at 20% or 40% dependent on your income tax position.
However, Taper Relief for business and non-business assets and Indexation Allowance for assets owned before 5 April 1998 are to be abolished, so it is quite likely that the disposal of an asset on or after 6 April 2008 could attract a far higher CGT liability than disposing of it on or before 5 April 2008. For example, the effective rate for the disposal of a business asset attracting full taper relief by a higher-rate tax-payer will rise from 10% to 18%.
Exemptions remain unaffected, but the spectre of an even greater tax bill means that it will be even more important financially to make maximum use of them by obtaining proper advice and planning.
If you are contemplating selling shares, a second home, a business or any other property which has gained in value, it would be wise to take advice now to determine whether it would be better to sell before or after 6 April next year. Our team of experienced tax professionals can be contacted at the Halesowen Branch of mfg Solicitors LLP.
If you would like to find out more, please contact us.
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