Are taxpayers about to pay for Covid-19?
Last month, I commented on the possibility of the Chancellor, Rishi Sunak using his July statement to announce tax hikes to pay for Coronavirus and I went on to present a webinar on why now is the moment to review your estate and investment planning.
It seems that the likelihood of those tax hikes is drawing ever nearer as the Chancellor has now asked the Office of Tax Simplification to review capital gains tax which could result in changes that will be used as a way of repaying some of the huge debt he has built up in the fight against Covid-19.
Whilst it was absolutely necessary for the Chancellor to take the steps that he did to fight the economic effects of the pandemic, the sums of money that he has had to find have been huge; and funding these figures is featuring much more regularly in debates both in the House of Commons and in other forums.
How might capital gains taxes and other tax reliefs be reviewed?
Some commentators have suggested that capital gains tax could be increased to the same levels as income tax which could result in bringing in £90bn of revenue for the government over the next five years.
The current ‘capital gains tax free’ uplift in value that can be benefitted from as a result of rebasing assets on death may also be withdrawn – potentially resulting in a tax bill for beneficiaries on gains relating to the period they have not benefited from.
And it is not only capital gains tax that is under review. Many professionals believe that Business Property Relief and Agricultural Property Relief, both valuable reliefs from inheritance tax, could be targeted.
Now is the moment to review your estate and investment planning
Whilst no definite measures have been confirmed there are some warning signs afoot. The Chancellor’s review into capital gains tax to ensure ‘the system is fit for purpose’ is due to be completed before Rishi Sunak announces his Autumn Budget and whilst this doesn’t mean that tax hikes will happen, it is certainly setting the wheels in motion to allow him to implement any changes the review might recommend.
Without doubt, now is the time for individuals to review their estate and tax planning whilst the current reliefs and exemptions are available; and whilst we know they work. This is particularly relevant to those who want to make provision for future generations by outright gifting or utilising trusts.
For more information you can watch my webinar on estate and investment planning that highlights the potential value to individuals of acting now.
Contact Bruce Clarke, Private Client law Sevenoaks, Ashford, Brighton & Hove, Uckfield
Bruce Clarke leads Rix & Kay’s Private Client Team. With eleven years’ experience of advising individuals on how to effectively manage their personal wealth, he has a detailed understanding of personal tax planning, creation of trusts and the administration of estates. Contact Bruce for more information and an informal chat about your options for estate planning. E. firstname.lastname@example.org t. 01732 440 853