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Reforms will put an end to tapered relief.

WHEN the Chancellor of the Exchequer, Alistair Darling, made his pre-Budget speech in October this year, he announced plans to reform some of the current structure surrounding Capital Gains Taxation.

The plans suggested that, from the new financial year (beginning April, 2008) the concept of taper relief will cease. So, instead of your Capital Gains being calculated on a tapered rate of either 10%, 20% or 40% (depending on your income tax rate) there will be one flat rate of 18%.

Currently, maximum taper relief is available on business assets that have been held for two years, and the maximum non-business asset taper relief is available on assets held for 10 years.

However, selling or passing on such an asset from April 6, 2008, will now be subject to the 18% rate of tax (an 80% rise).

Mr Darling said he introduced the measure so that private equity chiefs paid fairer taxes. However, smaller businesses may find they are paying much more Capital Gains Tax, and people planning to sell their assets and retire may now face a heavy tax bill they weren't expecting.

Basically, some people will be better off and some will be worse off, if or when the new measures are put in place.

Because of these changes, the Treasury have predicted their coffers will be swelled by a further pounds 350m in tax revenues for the next financial year.

If you have assets subject to Capital Gains Tax, then you need to make yourself aware of these proposed changes before they come into force.
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Title Annotation:Business
Publication:Daily Post (Liverpool, England)
Date:Dec 5, 2007
Words:258
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