After the UK general election in 2010 the collation government was formed. The two parties Liberals and conservatives joined together, the David Cameron as leader, Nick Clegg as Deputy and George Osborne as the new chancellor .
Several countries within the EU, specifically Portugal, Ireland, Greece and Spain have experienced the effects of not reducing their budget deficit. The United Kingdom was keen to ensure that this did not happen to them. As a consequence the new government introduced authority plans in the emergency budget and a complete review of spending.
There were far reaching changes to the UK tax system and spending plans. Reports initially indicated that Capital Gains tax would be brought into line with income tax. This provoked a number of concerns as it could have meant a significant rise in the CGT rate from 18% to 50% for high earners.
The CGt annual allowance of 10,200 was retained. It was confirmed that any gains should be added to income to decide the level of CGT payable. This was a change to the way CGt was calculated compared to the previous method.
Part of the change meant that basic rate taxpayers could pay the higher rate 28% if the gain when added put them into the higher rate tax bracket.
For many people the main issue relating to large capital gains relates to commercial or residential property they own. Unfortunately if you do have a large CGt bill and you are looking to sell the property investments , then the only option is to pay the tax. Of course capital gains tax is only paid when a gain is made. If you do not sell the asset then no gain is made. However this could cause issues with Inheritance tax if you hold the asset until death. However if the gain is in respect of other assets then careful tax planning could help and even wipe out any possible gain. However this is only part of the problem. To ensure that the issue with CGt does not happen again then investors should consider using tax efficient investments within their financial plans.
Tax can be a difficult area to work out. Always seek advice from professionally qualified people. Ask about the qualifications they hold and their fees for the proposed work. The internet is a good source of information and can help you find the right person.
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If you are perplexed with the most recent capital gains tax rates and you are trying to reduce your own CGT bill speak to your nearby ifa. They are able to explain Capital gains tax and how to lower your tax bill.
