Changes to CGT expected in next Budget
6 December 2020
A majority of financial advisers are expecting changes to CGT in next Budget, according to a survey by Canada Life.
Four out of five advisers (83%) polled1 by the company said they expected Capital Gains Tax would be affected, with 38% of those expecting CGT rates to increase in line with the recent Office for Tax Simplification (OTS) recommendations. Two in five advisers (42%) thought there would be a broader reform of CGT in the next Budget.
The research among advisers was conducted shortly after the OTS published a series of recommendations in its’ review2 of CGT rates. This included a recommendation to level up CGT tax rates to bring them more in line with income tax rates, while annual allowances could be reduced.
Canada Life also sought the views of UK consumers and found they were a little more optimistic about changes to CGT, with just over one in four (28%) saying they thought changes would be made in line with the OTS recommendations. A further 10% thought there would be broader reform at some point.
Commenting on the findings, Neil Jones, tax and estate planning specialist at Canada Life said: “CGT is an area of tax that is ripe for reform and the recent OTS recommendations only serve to shine a spotlight on this. Advisers are right to recognise likely changes are on the horizon and therefore begin thinking about their clients and ways to mitigate those changes.
“The direction of travel is clear, and advisers will be considering where client assets are invested and whether they need to recommend any changes. Depending upon client wealth, this could include ISAs, pensions and bonds. Investment bonds could have a key role to play especially if other tax advantaged investment wrappers have been utilised to the full. Any gains in an investment bond are rolled up, with gains subject to income tax when the money is withdrawn from the wrapper, which is a very useful tool in an advisers’ armoury.”
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