Potential Tax Changes
Raising capital gains tax is believed to be a likely option for the Chancellor to help pay for the £280 billion spent on coronavirus support. CGT is paid on the gains made when selling a personally owned property or investment worth £6,000 or more. Currently CGT is charged on residential property at 18 per cent (10 per cent on other assets) if you are a basic-rate taxpayer, and 28 per cent (20 per cent on other assets) if you are a higher or additional-rate payer. If these rates were aligned with income tax rates then basic-rate taxpayers would pay 20 per cent, higher-rate payers 40 per cent and additional-rate payers 45 per cent. Such a move could raise up to £14 billion for the Treasury.
Therefore, for a higher rate tax payer, the sale of a typical commercial or mixed-use property where the capital gain is £500,000 would currently incur a tax bill of £100,000 whereas if the changes are introduced, this could increase to £225,000.
If you are considering the sale of a property, we would be pleased to provide our opinion on value and advise on a strategy to achieve a sale prior to April 5th 2021.
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