CGT and its impact on investors

RayWolfe

dunstonh wrote: »

After all that, the CGT changes were minimal to most people. I suppose the media will now claim they reduced the impact.

Ahhhh, I was told it would adversely affect billions of people, some of whom were so poor that they were actually starving! What a disappointment.

Stavros_3

jamesd wrote: »

Well, the budget did this with CGT:

18% for basic rate tax payers, no change.
28% for higher rate tax payers from midnight 22 June 2010
CGT allowance unchanged at £10,100 and to rise with inflation (presumably CPI) in future years.

Cheers Gideon :beer::beer:

Sceptic001

Good news for basic rate taxpayers, but did I hear Osborne say that he is freezing the higher rate threshold, so a double whammy for anyone who creeps over the threshold and is liable for CGT (you can always rely on me to find a cloud in any given silver lining...;))

lisyloo

Good news for basic rate taxpayers

I've seen elsewhere that the deciding factor is now income PLUS GAINS.
So sell a house with gains and you might become a higher rate tax payer.

Perviously I believe it was decided on income alone.
Sorry to be the bearer of bad news, but I'm pretty sure this is correct.

Sceptic001

lisyloo wrote: »

I've seen elsewhere that the deciding factor is now income PLUS GAINS.
So sell a house with gains and you might become a higher rate tax payer.

Perviously I believe it was decided on income alone.
Sorry to be the bearer of bad news, but I'm pretty sure this is correct.

Surely that can't be right? Income is income and capital is capital...

CLAPTON

Sceptic001 wrote: »

Surely that can't be right? Income is income and capital is capital...

is was poorly expressed

but yes your capital gain is 'added' to your normal income less the cgt allowance (10,100) and you are taxed at 18% on the bit thats below 43,840 and then the rest at 28%

JamesU

Those that hold property investment long term for retirement (and holding this for well over 10 years) seem to be hit harder with an increased CGT rate and no indexation. Each individual circumstance is obviously different (actual value increase, offset costs/reliefs, salary/retirement income etc). But to put this into perspective, in the maths I have run:

With indexation/taper relief/40% CGT/allowances, CGT=20% of profit

When switched to 18% flat rate/allowances, CGT=16% of profit

Budget June 2010, CGT=25% of profit.


Edit/update: After initial irritation, if I look at this more objectively I guess this is a better compromise than ending up with 40% CGT and no indexation. There has been a real CGT increase relative to both previous methods used. But if CGT is in a range of 20% - 25% then I suppose (grudgingly) it is still a reasonable rate relative to e.g. paying 20%/40% on savings interest, main difference being there seems no compromise or benefit for taking the risk when investing.

New "hybrid" income tax/CGT calculations to use here:

http://www.hmrc.gov.uk/budget2010/rn-complete.pdf
(page 48, Example 1)


JamesU

Stavros_3

Can someone answer this case study, so I can get my head round the changes
Basic rate tax-payer holds investment portfolio for 5 years 2009 - 2014 then decides to sell. The net gain of the portfolio (excluding the s&s investments) when surrendered/cashed in is £80,000, what is that individuals CGT liability, ta

JamesU

Stavros wrote: »

Can someone answer this case study, so I can get my head round the changes
Basic rate tax-payer holds investment portfolio for 5 years 2009 - 2014 then decides to sell. The net gain of the portfolio (excluding the s&s investments) when surrendered/cashed in is £80,000, what is that individuals CGT liability, ta

Cannot be calculated without the salary figure.

JamesU

Stavros_3

JamesU wrote: »

Cannot be calculated without the salary figure.

JamesU

Untaxed Pension of 18k p.a