JUNE 2010 - CAPITAL GAINS TAX FEAR SPARKS RISE IN INVESTMENT QUERIES TO SOLICITORS
Birmingham based solicitors, the Wilkes Partnership, has already reported a surge in enquiries from those seeking advice on how best to realise their assets, following speculation surrounding plans to increase capital gains tax on personal investments in the forthcoming emergency budget.
The emergency budget which is scheduled to take place on June 22nd is one which is expected to tackle the country’s deficit reported to stand at £163 billion. With such a large shortfall to deal with, the Conservative-Liberal Democrat coalition will be looking for ways in which spending can be cut and revenue can be gained. One method proposed is to increase the rate of capital gains tax to fall in line with that of income.
At present capital gains tax stands at a flat rate of 18% whereas income is taxed up to a rate of 50%. With such a favourable rate of tax for capital gains, investors often opt for assets which allow them to take advantage of this rate such as property and shares. However, before the proposed changes come in to effect, it is likely that investors will look at ways to maximise the profit from their personal investments.
“Investors have made the most of the rule which allows tax to be paid on their investment gains at a flat rate of 18%. However, with the new coalition government having a huge deficit to reduce, it looks as though this low rate of taxation will end and capital gains are likely to be taxed at the same rate as income,” Andrew Hasnip, Partner, Wilkes Partnership
“Although details of any such change are unlikely to be announced prior to the budget on June 22nd, investors are already looking into ways in which they can crystallise their gains whilst the 18% rate is still in place. We have already had a number of enquiries from our clients who want to look at their options and we expect to receive even more in the run up to June 22nd.
“There is speculation that the proposed changes may not come in until April 2011 but this cannot be relied on as it would provide more opportunity for investors to crystallise gains at the current rate, which will reduce the tax take for the government. Instead we urge those with investments that would be subject to capital gains tax to look now at the various options open to them.”
