View more on these topics

Smith & Williamson predicts pre-Budget CGT increase

Smith & Williamson is predicting that the pre-Budget report may contain proposals to increase capital gains tax from the current flat rate of 18 per cent.

Smith & Williamson national tax director Richard Mannion says it is right that gains on long-term capital investments are taxed at a lower rate than income, but it has led to taxpayers seeking out ways of re-designating income as capital.

He says: “Consequently the CGT rate on short-term gains could be increased from its current flat rate of 18 per cent to an individual’s marginal rate of tax to make it less attractive to reclassify income.”

Mannion warns that HMRC may also scrutinise salary sacrifice, which is paid for by employers and therefore reduces the government’s tax take.

He says: “We could see the government restricting the tax relief on these benefits for higher earners in the same way as they are already planning to restrict tax relief on pension contributions for those earning £150,000 or more. Such a move could affect those in salary sacrifice schemes covering, for example, free lunches, child care vouchers, car parking and cycle to work schemes.”

Mannion is urging the Government to ease the rules on venture capital trusts and the enterprise investment scheme, to aid entrepreneurs and smaller businesses.

He says: “The conditions as to the size and value of companies which can qualify for investment under these schemes have been made much more restrictive over the last few years.
“We expect to see the business payments support service to be formally extended to partnerships, bearing in mind that the cash flow effects of the recession will be with us for some time yet.”


News and expert analysis straight to your inbox

Sign up


    Leave a comment


    Why register with Money Marketing ?

    Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm