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Capital Gains Tax Reform: What does this mean for taxpayers?

The webinar covered some important issues around capital transfers (including share-based rewards), increase in tax rates, reduction in the annual exemption, inheritance tax interactions and Business Asset Disposal Relief (BADR, formerly known as Entrepreneurs' Relief).

Our panellists included UHY Hacker Young Tax experts, Graham Boar and John Sheehan

During the webinar, our panellists explained what Capital Gains Tax reforms would mean for taxpayers and shared their thoughts and recommendations on what those taxpayers ought to be considering in the next few months.

John kicks off the webinar focusing on the recommendation of scrapping Business Asset Disposal Relief (formerly known as Entrepreneurs’ Relief):

“There are lots of businesses out there which might sell for less than £1m, or at least for less than £1m per shareholder, for whom this would be an overnight doubling of tax rate. Worse news, where the family business has been built up from scratch and the original cost of the shares is very low then whilst as inflationary relief similar to taper relief could be quite valuable a relief more like indexation would be of very little help.”

The other main area likely to affect business owners is a proposed attack on share based rewards. 

John continued, “the main way that employment taxes are avoided in share based rewards is through the use of specific tax advantaged schemes which have been made available as a way of incentivising and tying in key employees, most popularly amongst our client base under the EMI scheme.” 

Graham added, “I’ve got to say I’m not too comfortable with this part of the report and although I can take some reassurance from the positive observations it makes on employee share schemes I think a policy attack in this area would be to the detriment of the SME market and would be a short sighted tax grab by policy makers.” 

The discussion then moved on to private client matters and the report recommendations of increasing CGT rates and reducing the annual exemption. 

“Anyone thinking of a short to mid-term asset sale can accelerate it, locking in to current rules and rates. But a little thought and care needs to be taken in adopting that approach.” Graham advised.  

Graham wrapped up the session with a final piece of advice: 

“Like so much of today’s content, there won’t be silver bullets or one size fits all solutions, but almost universally the advisable reaction will be for taxpayers to take stock of their position and to weigh the likely effect of these changes against their personal and family ambitions.”

You can watch the recording of the webinar here.

You can read the 11 recommendations made by the Capital Gains Tax (CGT) reform report to the Chancellor, along with the UHY view on those recommendations in our summary paper here.

The next step

We are here to help. To find out more about the OTS report recommendations and how they may affect you then please contact our tax experts, Graham Boar or John Sheehan on / or call 01462 687333.