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Long-term shareholders to suffer under new CGT rules, says Heartwood

Many basic rate tax payers who are long-term shareholders will be penalised under the Chancellor’s introduction of a flat rate 18 per cent capital gains tax, says Heartwood Wealth Management.

Heartwood says one of the groups most affected will be pensioners who have built up share portfolios over a long period of time in order to fund their retirement.

According to Heartwood, a basic rate taxpayer who has a portfolio of £300,000 with long-term gains ranging from 1982 would normally pay 9 to 11 per cent tax on the net gains. From next year that will rise to 18 per cent.

Heartwood Wealth Management head of tax solutions Neil Edwards says: “The potential impact of this change to business owners and employee share scheme members has been well publicised, but unless the Chancellor modifies his plans there will be a considerable number of ordinary long-term investors who will lose out too.

“In the short-term investors should be wary of making any immediate or rash decisions. The details have yet to be published and until there is some certainty it would be foolhardy to make radical changes to existing investments based purely on an announcement. Even so, it is likely that ordinary investors will need to review their portfolios and consider taking action to use the advantages of the current rules before April 2008.”

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To be and not to be – Multi asset investing with conviction

At Pictet Asset Management we believe active management of asset allocation is the most important generator of returns. What is not to be in our portfolio is just as important as what is to be because good performance is determined as much by the assets you avoid as by those you hold. The FP Pictet Multi Asset Portfolio managers are not wedded to any particular […]

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