Rishi Sunak grilled over 'wishy-washy' plans by reporter
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Rishi Sunak’s statement in the House of Commons is just a matter of days away, and ahead of the Autumn Budget, Express.co.uk spoke to Christine Ross, client director and Head of Private Office (North) at Handlesbanken Wealth Management, regarding changes he could make. Ms Ross insisted Capital Gains Tax is a levy likely to be on the table for the Treasury, despite some people being less familiar with the sum. She said: “This is one time the Government can really enact a tax rise and not expect the reaction they would ordinarily experience.
“In most quarters, there is a real acceptance that the last 18 months has been particularly expensive, and it has got to be paid for in some way.
“Capital Gains Tax doesn’t raise a significant amount of money for the Treasury the compared to Income Tax and National Insurance, but I definitely think it is likely to increase and will be on the Chancellor’s agenda.
“Less people pay Capital Gains Tax, and whether this is right or wrong, the perception is that wealthier people pay that tax.
“It’s about redressing the balance. There’s been a lot of comment on who National Insurance rises will have a greater impact on, and many say this is those who are less well off. So, there could be a balancing set to take place here.”
Capital Gains Tax is a levy charged on the profit when a person sells something which has increased in value.
The gain a person makes will be taxed, rather than the amount of money someone receives.
Understandably, Capital Gains Tax rates for a number of Britons will be important, so some may be dismayed to know an increase might arrive in the near future.
While Ms Ross communicated her belief that Capital Gains Tax will increase with an announcement by the Chancellor on Wednesday, she did reference a potential “sticking point”.
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Ms Ross continued: “Many of those who have to reckon with CGT are those who are business owners.
“Winding back 18 months, we had a reduction in entrepreneurs relief, which gave most businesses who met the criteria, £10million of gain at 10 percent CGT. Anything above this level was at 20 percent.
“That was replaced in March of last year, and while people still call it entrepreneurs relief it is called Business Asset Disposal Relief – £1million at 10 percent.
“Would the Government deem £1million at 10 percent enough? Or could there be further changes?
“The Office for Tax Simplification in their report suggested that Capital Gains Tax be aligned with Income Tax rates. Whether this will go all the way up to 45 percent is not clear, but we could get 20 percent and 40 percent.
“But you’ve got to think about what this means for sellers – particularly business sellers – what that kind of implication would be.”
At present CGT is currently 10 percent, set at 18 or 28 percent for property depending on which tax band a person falls into.
However, due to potential changes in the tax landscape, Ms Ross said there are more people who are considering what kind of steps they can take next.
Some have expressed frustration with rising taxes, and are looking for a solution to the matter.
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Ms Ross added: “I’ve already had people start approaching me about advice on the rules for going non-resident – leaving the UK for at least five or six years because of what could happen to tax.
“I’ve had three serious conversations. While that doesn’t seem like many, I’ve definitely not had any conversations about this for about eight years. Before, it wasn’t on the table, people were just willing to put up with the way things were, but things are changing now.”
The Chancellor could make a number of changes to Capital Gains Tax, or choose to leave the levy alone entirely, however, Ms Ross has said there are a number of options on the table.
She concluded: “I do think there is going to be a change on the cards for CGT. However, it is how big a change this will be which is unsure.
“People who are selling things like the family business, that is their lifelong work. Do they make another set of rules which could provide some mitigation for business owners?
“While I do think on the one hand CGT will go up in this Budget, I don’t know whether the Government will be comfortable with hitting business owners hard in this way.”
It is worth bearing in mind Britons currently have £12,300 per year as an annual CGT allowance – the amount of capital gains they can make outside tax wrappers tax-free.
While the Chancellor has frozen this until 2026, there could also be the potential for change.
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