Lambert Chapman LLP’s Lisa Potter reviews the new Capital Gains Tax rules in terms of pounds, shillings and pence

In the recent budget the Chancellor announced changes to the capital gains tax regime.   Whilst the biggest change related to the rate of tax applied to non-business assets, an increase from 18% to 28%, the calculation has been amended for business assets which will result in approximately £800 of extra tax being paid.   Let’s look at the before and after calculation.   The calculation assumes that this is the only capital gain for the tax year.

 

Business assets

	Before	After
Capital Gain	90,000	90,000
Reduction	4/9	None
Revised Capital Gain	50,000	90,000
Annual Exemption	10,100	10,100
Net Capital Gain	39,900	79,900
Rate of Tax	18%	10%
Tax to be Paid	7,182	7,990
Increase in Tax		£ 808

So it appears that once again the Chancellor has introduced a hidden increase in taxes that appears to have gone unnoticed by many.

Non Business Assets

	Before	After
Capital Gain	90,000	90,000
Annual Exemption	10,100	10,100
Net Capital Gain	79,900	79,900
Rate of Tax	18%	28%
Tax to be Paid	14,382	22,372
Increase in Tax		£ 7,990

This is a significant increase in tax, especially for those that have invested over the years in property as a means to providing them with a pension fund in the future.   If the Government are serious about individuals providing for their future pension then perhaps the decisions of A Day should be overturned and residential property should be allowed in a pension fund!

These are basic calculations and if you have an asset which may be subject to Capital Gains tax, please seek appropriate professional advice from your Accountant.  

If you are planning to sell an asset or to invest in an asset which may become subject to Capital Gains Tax in the future please contact one of the Partners at Lambert Chapman LLP for tax planning advice.

 

 

Date:27 July 2010

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