Capital Gains Tax

The new Conservative/Liberal Democrat coalition government has announced plans to increase the rate of Capital Gains Tax from the current flat rate of 18% to a rate equal to the income tax rate payable by a person making the disposal.

The top 50% rate may be excluded in which case the maximum liablity to capital gains tax would be 40%.  It is not known whether indexation allowance will be introduced or whether the tax will be chargeable simply on the difference between the sale price and the acquisition cost irrespective of the length of ownership. 

It is believed that there will be some form of exemption or relief from this increase for business assets. 

Clients who have non business assets and who would be liable for capital gains tax on their disposal should consider disposing of those assets before the rate of tax is increased to take advantage of the current low 18% rate.