TAX NEWS - 2010

Captial Gains Tax (CGT) rise could match income tax

A rush on sales of shares and second homes is expected from private investors, in an attempt to take the profits before a potential rise in capital gains tax (CGT) is announced in the new coalition government's first budget.

It is thought that one item in the coalition agreement between the Conservatives and Liberal Democrats is a CGT rise for non-business assets from 18 per cent to close to 40 per cent.

There are even concerns that some assets could incur a 50 per cent tax – in line with the recently enacted 50 per cent income tax band for those earning more than £150,000.

Tax advisers fear there is a shrinking window for investors and property owners to realise gains at 18 per cent, as a new budget is to be announced within 50 days and could be put into immediate effect.

Chartered accountant, Ronnie Ludwig, of Saffery Champness, said, "The widely anticipated increase in CGT on non-business assets looks set to become reality imminently." "In advance of these changes being formalised, we are likely to see people scramble to take gains, prompting a rush of sales of second homes and share portfolios."

Chris Groves, partner at law firm Withers, said, "Historically, personal tax rises have only taken effect from the start of the tax year on April 6 so any rise would be expected to take effect from April 6 2011. However, could this year be the exception that proves the rule?"