On 12th May 2010 the new government announced in its coalition agreement that they:
“agree to seek a detailed agreement on taxing non-business capital gains at rates similar or close to those applied to income, with generous exemptions for entrepreneurial business activities.”
The terms used in the statement are not yet defined and may not be so until the emergency Budget, due to take place within 50 days (ie. by the end of June). However, it would seem that, under the new rules, gains on the sale of investment assets, such as share portfolios, artwork, second homes and perhaps buy-to-let properties could be taxed at rates of up to 40% or 50%, rather than the current 18% rate. There is also concern that business assets may not be taxed as generously as they are under current rules, despite the promised “generous exemptions”.
Non-doms and those with interests in non-UK trusts could find themselves taxed at the higher rate on past gains where these are matched with remittances or distributions made after the rules change.
It is not certain when the rate change will take effect, and while many are hoping it will be delayed until the beginning of the next tax year (April 2011), it could take effect from the date of the Budget next month, or even (though there is no precedent for this) backdated to April 2010.
If you have any questions about the proposed changes and how they might affect you, please speak to Mark Giddens in our Private Client Services department, or your usual UHY Hacker Young contact. We will be happy to discuss your options with you, and whether there are ways that the effect of the changes can be mitigated or avoided.