Newspaper article The Journal (Newcastle, England)

Winners and Some Losers as Chancellor Moves Goalposts; Wealth & Investment Management Simon Dobson (Pictured) Discusses the Effects of the New Capital Gains Tax Changes

Newspaper article The Journal (Newcastle, England)

Winners and Some Losers as Chancellor Moves Goalposts; Wealth & Investment Management Simon Dobson (Pictured) Discusses the Effects of the New Capital Gains Tax Changes

Article excerpt

Byline: Simon Dobson

THE Chancellor of the Exchequer has been described as being like the groundsman of a football club that keeps letting in too many own goals. Not only does he attempt to level the playing field, but he moves the goal posts as well.

On this occasion, the groundsman has not even waited until half-time or the end of the match to make his alterations, meaning that confusion ensues for the players while play continues.

What is capital gains tax?

Capital gains tax is a tax on the growth of your investment. In the current tax year, there is an allowance of pounds 9,200 for each individual where no tax is charged. Over and above this, the rate of tax used was dependent upon the investor's highest rate of income tax.

What has changed?

Previously taper relief was available, which meant that personal investors would be credited for holding on to investments for a longer time.

Maximum taper was awarded after 10 years, so the effective rate of capital gains tax fell from 40% to 24%.

For owners of business assets, the investment needed to be held for only two years and the rate of tax was then just 10%.

From April, the rate is 18% whether they are business assets or personal assets, and whether they are held for one or 10 years.

Will I be better or worse off?

Now there is no distinction between business and personal assets. In addition there will be no need to keep a record of how long the investment has been held. Only one rate is used, so matters would appear to be a lot less complex.

Nevertheless, those who were expecting to have their gains taxed at 10% will be disappointed that they now have to pay 18%. …

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