The Chancellor of Exchequer has made a request to the Office of Tax Simplification to review the Capital Gains Tax (CGT) regime.
The review will not automatically result in policy changes, however, we will be examining the details of the review and providing comments where we consider it necessary. Any recommendations made to the Government could lead to changes in the future to the tax system.
The review intends to consider all aspects of CGT in relation to individuals and smaller businesses.
- Overall CGT is a modest source of revenue for the Exchequer
- The number of CGT taxpayers increased by 3% to 281,000 in the tax year ended 5 April 2018
- 62% of CGT came from those who made gains of £1 million or more in the tax year ended 5 April 2018
- Majority of gains are covered by the CGT tax free annual exemption (currently £12,000)
- Over 70% of all those who pay CGT did so only once in the 11 years to 2017‐18
CGT Continues to Grow in Its Complexities
Over the last few years there have been several changes affecting individuals and businesses in the UK and overseas. The CGT regime has grown in its complexities from having different tax rates (currently 10%, 18%, 20% and 28%), conditions depending on type of disposal being made, reporting methods, deadlines, and payment dates.
There is a growing pressure on individuals and businesses to constantly be up to speed on the UK tax changes. Penalties and interest can arise on omissions, errors, or late submissions, and this can apply even where there is no tax liability.
CGT falls within the self-assessment regime which makes the taxpayer responsible for the correct legal tax charge and reporting requirement. It is important for taxpayers to demonstrate they have taken reasonable steps to ascertain what their tax obligations are.
If you have any questions regarding this article, please get in touch with our tax team.