The Chancellor made a surprise decision to cut capital gains tax (CGT) in his Budget 2016 – but not for everyone.
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;
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 firstname.lastname@example.org, alternatively you can call Carole Jordan FCCA on 01273 882200.
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