Capital Gains Tax (CGT) is a levy charged on the profit made when someone sells an asset which has increased in value. It is the gain a person makes which is taxed, rather than the amount of money they receive, but some assets will be tax free. With increasing speculation Mr Sunak could change aspects of CGT tomorrow, some may wish to consider what this will mean for them.
He added: “We’d also recommend being mindful of the use on spousal CGT allowance.
“Transferring assets into a spouse’s name makes them exempt from CGT, so it can help to make use of their CGT allowances and lower income tax rates for encasements.
“Also, make sure that any losses which have been crystallised in previous years are considered when looking at gains in the current tax year.
“Previous years’ losses can be used to offset gains in the current year.”
Mr McKendrick highlighted some of his clients have taken the opportunity to organise a property portfolio now to toke advantage of both the stamp duty holiday and CGT rates as they currently stand.
With speculation mounting surrouding a CGT increase, he found the selling or gifting of assets has been made more amenable.
Andrew Hirst, partner and chartered financial planner at Equilibrium, also commented on the matter.
He said: “With respect to CGT, the suggestion could be to use the £12,300 allowance – and perhaps the current 10 percent band too.
“It could also be to maximise pension and ISA contributions pre-Budget day.”
However, Inheritance Tax also proves an area of interest, as it can often tie in to how people view Capital Gains Tax.
Mr Hirst considered potential changes to Inheritance Tax, and suggested people act before the Budget.
He concluded: “For clients who, for intergenerational planning reasons, want to make large gifts to children or grandchildren in the next year or so, our suggestion would be that they consider bringing forward the gift pre-Budget day.”
There is, of course, limited time to act if Britons wish to make decisions before the Budget.
Chancellor Rishi Sunak is set to lay out his Budget plans for the nation shortly after midday tomorrow.
While tax changes have been widely debated, it is expected Mr Sunak will also address Government support measures such as furlough and SEISS.
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