HM Treasury has asked the Office of Tax Simplification (OTS) for a Capital Gains Tax Review and aspects of the taxation of chargeable gains in relation to individuals and smaller businesses. The OTS has called for comments on the current system by 12th October. This review was unexpected, and has caused speculation of whether the Chancellor is looking to change Capital Gains Tax (CGT) to help fund the unprecedented spending in response to COVID-19.
The latest data from HMRC shows that there were fewer than 300,000 CGT payers in 2017/18; with two thirds of the CGT raised in that year coming from 3% of CGT payers who made gains of £1 million or more.
CGT is paid on the profit from selling an asset. However, currently there is an annual exemption which for 2020/21 allows up to £12,300 of net gains to be realised before any tax becomes payable. Even then, for a higher rate taxpayer, the maximum tax rate is 20% (28% for residential property).
We will keep you informed as we learn more.