In recent weeks the Labour Party have confirmed ahead of their possible election victory that in the next 12 to 18 months they plan to review Capital Gains Tax Rates. They have also confirmed their intention to potentially increase Inheritance Tax liabilities for homeowners. They plan to do this by scrapping the current Residential Nil Rate Band.
Capital Gains Tax:
At present CGT is charged at 10% for Basic Rate Tax Payers and 20% for High Rate Taxpayers for gains over the Annual Allowances. The current Government has already reduced the CGT personal allowance by 50% for the current tax year. This is due to reduce again from April 24.
The CGT on Buy to let property gains held personally (apart from Main Residences) are 18% and 28% at present.
Many buy to let Investors are now suffering higher Mortgage Interest payments and are considering disposing of Investments or Property with gains and paying the current low rates before potential higher rates are introduced in 2024.
In 2008 CGT was charged at the same rate as Income Tax. This means that if Labour reintroduces this policy the tax liability on gains for Investors could increase significantly
There are many HMRC-approved “Tax Wrappers” available which are not liable to CGT. Many investors are reinvesting their disposal proceeds into these Investment options
Please contact Blackstone for a CGT Review and discuss potentially more tax-efficient options to shelter future returns.
At present a married couple who own a home where their estate passes to direct descendants (under £2m) can increase the Tax Exempt portion of their estate from £650,000 to £1 Million by using the Residential Nil Rate Band. Labour is reviewing the RNRB which could lead to your IHT liability increasing by £140,000.
There are numerous HMRC-approved options to mitigate your IHT liability. Many options do not involve gifting assets and retaining full access to income or capital.
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