UK Businesses Anticipating Changes To CGT Rules

by Robert Lee, Tax-News.com, London

23 November 2004

With Gordon Brown’s pre-Budget report just around the corner, speculation is mounting with regard to the Chancellor’s plans for capital gains tax, and many observers are predicting that some form of change will be on the cards.

“We've got very strong information that some major change will be introduced, and although it may be that it doesn't get announced quite as soon as the pre-Budget report, it's clearly being looked at," Stephen Quest, tax partner at the accounting firm Grant Thornton commented, according to the Daily Telegraph.

Mr Quest believes that the CGT reforms will be aimed at improving the transparency and fairness of the system rather than at raising revenue, although he suggested that a rise in the bottom rate is a strong possibility.

At present, the effective capital gains tax on the sale of business assets held for more than two years is 10%, and the current system is generally recognised as being one of the most benign capital gains tax regimes in Europe.

However, it is anticipated by many that the government is not intending to be as generous in the future, and is likely to withdraw some of these benefits in the next Budget, prompting many businesses to consider the sale of assets now before a harsher regime is introduced.

"I would never advise a business to make a strategic decision based on possible changes in the tax regime, but there certainly won't be a better CGT regime after the pre-Budget report or possibly the Budget," Mr Quest told the Telegraph.

Brown is due to make his pre-Budget announcement on the 2nd December

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