A capital gains tax cut!

  • by Carole Jordan
  • 08 Apr, 2016
Capital gains tax cut businessheads blog

The Chancellor made a surprise decision to cut capital gains tax (CGT) in his Budget 2016 – but not for everyone.

Will the capital gains tax cut affect you?

One of the most significant changes in the last budget was the reduction in CGT rates from the previous 18% within the basic rate band and 28% for any gains in excess of the basic rate band.  

CGT rates have generally been cut by 8% from the start of 2016/17 to 10% and 20% respectively. On this occasion the Treasury says that “The government wants to ensure that companies have the opportunity to access the capital they need to grow and create jobs, and wants the next generation to be backed by a strong investment culture.”  

There are two exceptions to the reduction;

  • recipients of ‘carried interest’ (typically private equity or hedge fund managers)
  • owners of residential properties that are not their main homes (such as buy-to-let investors). These two categories will be subject to an 8% surcharge, taking their rates back to the 18% and 28% levels.

The cut in CGT rates is the second piece of good news for investors in shares, units trusts, open-ended investment companies (OEICs) and other collective share-based funds, coming as it does on top of the introduction of the £5,000 dividend allowance from 6 April 2016. The Chancellor clearly wants to encourage equity investment – at least for the time being.

But buy-to-let landlords will not benefit and with the reduction in tax relief on mortgage interest careful calculations need to be done on the expected returns on properties to be sure they are a worthwhile investment.

Property owners should take advice on their situation regularly as property tax is one of the most complex areas. 

 Contact us for professional advice on your properties at info@businessheads.co.uk, alternatively you can call Carole Jordan FCCA on 01273 882200.

All details above were correct at the time of publishing - for more up to date information please get in touch .

You might also be interested in...

If you enjoyed the blog, why not leave us a comment, or share it with a friend...

Free advice delivered to your inbox

Browse our other blog posts...

Our latest blog

by Carole Jordan 12 Oct, 2017

This is the first in our series of blogs designed to help you better understand your business accounts. We’re kicking things off with the profit & loss report!

by Carole Jordan 09 Oct, 2017

Taking on your first employee can be an exciting time but there are some responsibilities you need to be aware of. One of them is compulsory pensions these are your auto-enrolment responsibilities. Find out what this means below.

by Carole Jordan 02 Oct, 2017

This is the second most popular question from business owners. This sounds like a simple question but the answer is complex and involves many aspects to consider. The answers will depend on the make of the car, the tax position of the owner, their business and the method of ownership.

by Carole Jordan 25 Sep, 2017

Dealing with overseas customers and VAT rules can be a bit complicated for some businesses, particularly those in retail where you may not have proof that goods are leaving the UK.
Read below to find out more about the options available to your business.

by Carole Jordan 18 Sep, 2017

If you receive rental income from a furnished residential letting then you’ll be aware of a “Wear and Tear” allowance, eligible for use against your properties. This allowance recently saw a change to its terms, read below for more details.

More posts
Share by: