New Capital Gains Tax rules from 6 April 2008

BorisTheSpider_3

For disposals on or after 6 April 2008 there will be a single CGT rate of 18 per cent, resulting in a more straightforward system for taxpayers.

As part of this new system the annual exempt amount (currently £9,200) will remain in place, but taper relief and indexation allowance will be withdrawn.

The government is presenting this as a tax cut, but is it actually a rise, given the lack of taper relief and indexation allowance?

Anyone care to analyse?

Brum_Man

We can't really as non of the people on the BBC were even 100% sure what it meant!

BorisTheSpider_3

Seems good for higher rate tax payer shareholders, but very bad for business holders who did pay 10% (they got 75% relief) and now pay 18%. For those on basic rate tax making a disposal (pensioners?), then you'd previously pay 20% * 60% on shares held for 10 years = 12%, but now pay 18%. If you are a basic rate tax payer and held shares for 4 years or less, the rate will fall.

18% is still well worth avoiding for EVERYONE....

BorisTheSpider_3

that's because the BBC are economically illiterate and didn't read the handy 215 page document on their website.

It's very clear.

No more taper relief.

Rate cut to 18%

ramborai1987

can someone explain is 18% the chargeable gain or is 18% the amount of tax you will pay on profit.

also what will happen to all the other reliefs like Private residence relief, letting relief etc etc. will they all be thrown out too?

just curious

Brum_Man

BorisTheSpider wrote: »

that's because the BBC are economically illiterate and didn't read the handy 215 page document on their website.

It's very clear.

No more taper relief.

Rate cut to 18%

Lol, handy!

@ ramborai1987, 18% will be the flat charge on the profit.

EdInvestor

ramborai1987 wrote: »

can someone explain is 18% the chargeable gain or is 18% the amount of tax you will pay on profit.

The tax you pay on the profit after deducting the reliefs and the annual CGT allowance of 9,200.

also what will happen to all the other reliefs like Private residence relief, letting relief

Looks like no change to them.

lordgaino

as an individual tax paying share trader this looks like the best tax cut ive ever seen!!!

StevieJ

Looks like the final straw for the housing market with long term landlords looking to sell before the indexation/taper relief is scrapped.

Aegis

Am I right in saying that the only people who will actually be better off with this are fully higher-rate taxpayers and basic taxpayers disposing of short-term assets (i.e. who would have been paying 20% before this change)

This new system seems to have been heavily skewed in favour of the rich, or at least those disposing of assets that push them into the higher-rate tax band, as they can now invest in as tax-efficient a manner as the basic/lower rate (or even non-) taxpayers. I'm not quite sure what the Labour party was thinking with this, as when people realise what it means for those without large incomes they will conclude that this is actually going to mean more tax paid by the majority of people selling assets.

Have I got mixed up somewhere along the line?

BorisTheSpider_3

StevieJ wrote: »

Looks like the final straw for the housing market with long term landlords looking to sell before the indexation/taper relief is scrapped.

Rubbish, you'd have to have held for 10 years to get indexation allowance, and the maximum taper relief works out at 24%.
Any BTLers would be better off waiting until next April to sell, when they get a nice tax cut on their speculation.