Private investors can breathe a sigh of relief as the actual bite of the new capital gains tax rules is not nearly as bad as the barking beforehand.
The annual exemption remains at £10,100 (instead of the trailed reduction to £5,000 or even £2,000) while the rate for basic level taxpayers stays at 18 per cent.
"Higher rate taxpayers will now pay 28 per cent. This still gives a substantial advantage over their income tax rates of 40 or 50 per cent. And it is only marginally higher than the 24 per cent levied a few years ago – a rate which needed a full ten-year holding period to reach. This new rate has achieved a balance between raising tax and not deterring investment," says Kate Davidson at Mayfair-based discount IFA Allenbridge.
Basic rate taxpayers should note, however, that if their taxable gains (after the first £10,100 exemption) and their income combined is over the higher rate income tax rate threshold (£43,875), they will be charged at 28 per cent on the balance of their gains over that level.
"Basic rate taxpayers might need to consider legitimate planning such as splitting their sale across two tax years or maximising the annual allowance of their spouse or civil partner," adds Kate Davidson at Allenbridge.
But it is an increase, nonetheless. So investors may find added attractions in tax-favoured investments such as ISAs where the annual investment limit is now £10,200.
Investors with larger amounts could potentially be attracted to Enterprise Investment Schemes which involve equity investment in small, unquoted companies.
An EIS can provide a means of CGT deferral, a measure of income tax relief, tax-free dividends and a shelter from Inheritance Tax.
Media enquiries
Contact Details:
Kate Davidson, Public Relations and Media Manager at Allenbridge Group PLC.
Mob: +44 (0)78 1462 4161
Tel: +44 (0)20 7409 1111
Kate.davidson@allenbridge.co.uk
http://www.allenbridge.co.uk/
Anthony Yadgaroff, Managing Director at Allenbridge Group PLC.
Tel: +44 (0)20 7409 1111
Anthony.yadgaroff@allenbridge.co.uk
Notes to Editors:
Allenbridge Group PLC is a rare beast in the investment jungle, a Mayfair-based discount broker that also advises large FTSE corporate pension funds and global banks. Founded in 1985, it carries out specialist research and consultancy, analysing investment manager performance across a wide range of funds: Unit Trusts, Investment Trusts, Venture Capital Trusts, Enterprise Investment Schemes, Charities, Hedge Funds, Funds of Hedge Funds and institutional Pension Funds.
In addition to providing comprehensive advice and strategic investment consultancy to leading institutions, Allenbridge also offers monitoring services, valuations and its specialised AllenbridgeCare service to individual investors on investment products and tax-shelter vehicles.
Allenbridge’s private investor division serves over 14,000 clients; retail and institutional funds under advisement exceed £25 billion.