Tax Corner

Published: 23rd November 2007

Take Advantage of 10% Capital Gains Tax Rate Whilst You Can

As from 6^th April 2008 Taper Relief and Indexation will be abolished and there will be a new flat rate of Capital Gains Tax 18% for individuals. If you are thinking of selling a property or a company in the near future that qualifies for full Business Taper Relief your tax rate prior to 6^th April will still be 10%. In view of this where possible any intended sale should be concluded prior to 6^th April 2008.

However a sale may be in the offing but for some reason cannot happen before 6^th April 2008 or indeed you intend to sell but have not found a buyer. In this circumstance it may be possible to crystallise the gains before 6^th April with a view to securing the 10% tax rate. We have a number of schemes with our accountancy contacts to allow you to fix the gains prior to the 6^th April deadline.

The effect of the schemes is that you pay 10% tax (assuming the property or company qualifies for full Business Taper Relief) by January 2009 based on the market value of the asset at the point of crystallisation and will simply pay 18% tax on any further increase in value of the property. Even if the value of the asset were to fall slightly between undertaking the scheme and eventual sale it is still likely the overall tax bill would be less than if you do nothing.

If you are interested in looking into whether this form of planning may be utilised by you or one of your clients then please let your regular contact at Mace & Jones know and they will put you in touch with a member of our Tax, Trusts and Estates team.