Can Capital Gains Tax rate increase mid tax year?

Martico

masonic said:

TheHemulen said:

As Labour refused to deny that it would increase CGT and assuming the worst come the first Labour Budget.. Could they increase the rate applicable with immediate effect straight after the budget and if so would the rate then be different for sales pre and post rise?
This will be the first year I'll need to do a tax return so I've not had experience of this but I gather you pay CGT at the end of the year on all gains over the threshold. If the rate is different at points of the year is it possible to get different sales taxed at different rates on one return?
I've tried Googling this but can't get any results for mid year increases so perhaps this just doesn't happen.

 They could pass legislation that cats are dogs. 

Different bunch in charge now

nottsphil

masonic said:

TheHemulen said:

As Labour refused to deny that it would increase CGT and assuming the worst come the first Labour Budget.. Could they increase the rate applicable with immediate effect straight after the budget and if so would the rate then be different for sales pre and post rise?
This will be the first year I'll need to do a tax return so I've not had experience of this but I gather you pay CGT at the end of the year on all gains over the threshold. If the rate is different at points of the year is it possible to get different sales taxed at different rates on one return?
I've tried Googling this but can't get any results for mid year increases so perhaps this just doesn't happen.

Parliament is sovereign, so anything that is technically feasible could be done. It would be possible for them to change it retrospectively for the whole of this tax year if they wished. They could pass legislation that cats are dogs. But it is not something that is even remotely likely IMHO.

Actually, it's only the Sovereign who is sovereign. If he doesn't give royal assent to something that Parliament passes, then no court can enforce it.

subjecttocontract

Adjusting property CGT (currently 18% & 28%) mid year is entirely possible. The tax is payable within 60 days of sale so introduction of the new rates could be on any date and would be easy to check.

masonic

nottsphil said:

masonic said:

TheHemulen said:

As Labour refused to deny that it would increase CGT and assuming the worst come the first Labour Budget.. Could they increase the rate applicable with immediate effect straight after the budget and if so would the rate then be different for sales pre and post rise?
This will be the first year I'll need to do a tax return so I've not had experience of this but I gather you pay CGT at the end of the year on all gains over the threshold. If the rate is different at points of the year is it possible to get different sales taxed at different rates on one return?
I've tried Googling this but can't get any results for mid year increases so perhaps this just doesn't happen.

Parliament is sovereign, so anything that is technically feasible could be done. It would be possible for them to change it retrospectively for the whole of this tax year if they wished. They could pass legislation that cats are dogs. But it is not something that is even remotely likely IMHO.

Actually, it's only the Sovereign who is sovereign. If he doesn't give royal assent to something that Parliament passes, then no court can enforce it.

The King is not at liberty not to give something Parliament passes royal assent. He could try it once and see how long he lasts! Of course this situation will never arise because all parties know the very survival of the UK monarchy hangs by the thread of this convention.

Sg28

Hoenir said:

Rather than wasting your time Googling or reading conspiracy theories on social media wait until the Autumn statement.  

I'd say its perfectly sensible to be researching potential tax changes changes that may come with a new government. 

Ive done some googling over the last few weeks myself .

OldScientist

nottsphil said:

Hoenir said:

Rather than wasting your time Googling or reading conspiracy theories on social media wait until the Autumn statement.  

It's hardly wasting time trying to ascertain how a gain would be taxed this year.  Maybe the OP doesn't want to buy thousands of pounds worth of short dated gilts only to find that they are suddenly accessible for Capital Gains Tax this year.

My understanding is that gilts have been exempt right from the introduction of CGT* in the mid 1960s (in other words through a range of governments of different hues) since a) this improved the attractiveness of the gilt market (I doubt that making selling UK debt more difficult is on the chancellor's radar), and b) the UK insurance and pension industry makes significant use of gilts. I note that corporate bonds are also exempt from CGT and, again, it is unlikely that a chancellor striving for growth and investment would want to make it more difficult for industry to borrow.

* an early version of CGT was charged where people held gilts for short periods (less than 3 months) - something that was introduced by the MacMillan government in the early 60s to damp down speculation.

There is an interesting (YMMV!) history of CGT at https://researchbriefings.files.parliament.uk/documents/SN00860/SN00860.pdf

As to whether rates will be changed - I have no idea.

Hoenir

nottsphil said:

Hoenir said:

Rather than wasting your time Googling or reading conspiracy theories on social media wait until the Autumn statement.  

It's hardly wasting time trying to ascertain how a gain would be taxed this year.  Maybe the OP doesn't want to buy thousands of pounds worth of short dated gilts only to find that they are suddenly accessible for Capital Gains Tax this year.

Your comment summarises why speculation is utterly pointless. As it's not looking at the much bigger macro picture. Think about the longer term implications for Gilts. Also the billions sitting on the BOE's balance sheet that are being offloaded through QT. 

eskbanker

masonic said:
They could pass legislation that cats are dogs.

The Scottish government had a go at legislation along similar lines (as long as the cat identified as a dog for a few months) but was stymied by both Westminster and adverse publicity generated by the likes of JK Growling (sorry!)

Bostonerimus1

The sky is falling. If the CGT rate is a worry, be thankful.

zagfles

ColdIron said:

zagfles said:

EthicsGradient said:

Changing a rate in the middle of a tax year would be incredibly complicated. You'd have to effectively do 2 calculations of consolidated capital gains, rather than one, and that then brings up questions of how yearly allowances are split, where losses are put, and so on. No, I don't think any government has ever attempted that before. 

It would be complicated but easily possible, there would have to be rules about splitting the allowance, losses offsets etc, but it would be nowhere as complicated as for instance aligning the pension input period with the tax year which was done mid tax year.

But of course the realigning of the PIP was achieved by effectively increasing the allowance, giving some a double bite over the transitional period. Many would welcome such a mechanism to overcome the difficulty

The alternative of announcing a significant rise in advance to apply at the start of the next tax year would be crackers as everyone with a gain would just realise it/B&B it to pay tax at the lower rate while they still can.

Which is what happens with any change, such as the reductions of the Annual Exempt Amount, it's factored in. The prize is not stinging a few people for a few months, but the perceived increased tax take over coming years

It's not the same as any other change. A gain could have built up over years, or decades, and that entire gain would be taxed at a new rate. And could be easily avoided if an increase was announced in advance. 

As above CGT rates have been changed mid tax year before, no reason to think it won't happen again.