Rishi Sunak says ‘all support will be reviewed in budget’
Rishi Sunak, Chancellor of the Exchequer, has been tasked with commandeering Britain’s finances amid COVID-19, and recouping the cost of the pandemic. Many have suggested the Chancellor will be announcing changes in his March Budget, which now is only a month away. Tax changes, and indeed rises, have been feared as a way to raise funds, but Capital Gains Tax (CGT) is one levy which has garnered significant attention.
Healthy Investment, a mutually owned provider of savings and investments, believes CGT could be high up on Mr Sunak’s list in the Budget.
Capital Gains Tax is chargeable when a person sells an asset for more than they originally paid, and thus will be charged a percentage of the profit.
Some assets, including those saved in an Individual Savings Account (ISA) are exempt from such a move, and can therefore act as a safe haven for Britons who wish to shield assets.
Moving assets out of the scope of CGT without incurring any tax on the transaction is commonly known as “bed-and-ISA”.
We will use your email address only for sending you newsletters. Please see our Privacy Notice for details of your data protection rights.
Peter Green, chief executive of Healthy Investment, commented on the matter.
He said: “There is strong political pressure on the Chancellor not to endanger the post-Covid economic recovery by increasing taxes on income or expenditure, but he also faces calls from many in his own party to start attempting to ‘balance the books’.
“Capital Gains Tax is generally seen as a tax on moving money around, rather than on production or consumption, so it could be a soft target.
“In particular, reducing the annual allowance would increase revenues without actually being seen to raise the headline tax rate.
Inheritance Tax: Britons pay £1.2billion more than necessary – act now [ANALYSIS]
Rishi Sunak may target your pension allowance this year – key deadline [EXCLUSIVE]
Inheritance Tax UK: Britons feel ‘disgusting’ tax should be abolished [POLL]
“Bed-and-ISA is a well established practice that many investors employ regularly as part of their financial planning strategy.
“I would urge them to make the most of it now in case the scope for doing so is reduced after April 6.”
Mr Green explained a reduction in CGT could be presented by the Conservative government as a tax on “fat cats”.
However, he also went on to note this potential CGT decrease could affect those who have inherited ISAs from their parents.
He added: “When anyone other than a spouse or civil partner inherits an ISA, it ceases to be an ISA and becomes subject to CGT and Income Tax.
“For many people, who because of the exponential rise in housing costs over the past 20 years have been unable to save as much as earlier generations, bed-and-ISA is simply a way of returning assets to the tax status they enjoyed before being inherited, and maximising families’ security as they plan for their old age.”
As a result of such circumstances, Health Investment has urged Britons to take action on the matter.
It has encouraged people to make use of their annual Capital Gains Tax (CGT) allowances as the April 5 deadline for ISA subscriptions loom.
This year, Britons are able to save up to £20,000 into an ISA, and the same will be true for the forthcoming tax year.
Tax on modest transactions can be mitigated by the annual allowance for gains that individuals are allowed to crystallise before CGT kicks in.
For the current tax year, this is a sum of £12,300 per person.
In recent months, there has been concern about whether the Chancellor could enact a middle-class tax raid in the March Budget.
Back in November 2020, a report from the Office for Tax Simplification (OTS) revealed some interesting findings about the levy.
The report stated the Treasury could potentially raise £14billion by bringing CGT rates in line with Income Tax.
It also suggested the CGT allowance could be lowered to somewhere between £2,000 and £4,000.
However, these are only recommendations and the Chancellor is likely to be considering the issue further before making a final decision.
Source: Read Full Article