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Tax Day 2021: Capital Gains Tax left untouched
On 23 March 2021 the Government published more than 30 tax policy announcements and documents known as ‘Tax Day’. Here we take a look at the latest developments in relation to a number of personal tax areas.
Capital Gains Tax (CGT)
Although not a great deal to take away from a personal tax standpoint, interestingly, anticipated changes to Capital Gains Tax were set aside despite last year’s Office of Tax Simplification (OTS) report. This report included a series of recommendations which pointed towards major CGT reforms.
Two of the main recommendations made by the OTS were cutting the annual exemption (currently £12,300) to between £2,000 and £4,000 and aligning CGT rates more closely with Income Tax rates. However, for now, CGT reform has been placed on the back burner, most likely due how challenging changes of this magnitude would be to implement due to the number of potential stakeholders who would be affected.
Inheritance Tax (IHT)
A cutting of red tape (easing of the reporting regulations) will be introduced whereby 90% of non-taxpaying estates will no longer have to fill out IHT forms for deaths when probate or confirmation is required. The need for physical signatures of all involved on an IHT return has also been permanently relaxed.
Trusts
Whilst a potential overhaul of the taxation of Trusts had been considered in a separate consultation, it was decided that appetite for reform in this area wasn’t great enough at this moment in time.
Crackdown on Tax Avoidance
Harsher sanctions for promoters of tax avoidance schemes including freezing/securing assets to enable forced penalties, closures and disqualifications appear to be on the horizon as part of the Finance Bill 2021. These measures will also give greater help to taxpayers in helping them get out of these schemes.
‘Pay as you go’ and Making Tax Digital
In line with the Government’s plans to roll out Making Tax Digital to self assessment taxpayers from April 2023, a consultation is looking at modernising tax administration by introducing a system to pay Income Tax and NICs more regularly throughout the year.
More information
More information can be found on the following websites.
Chartered Institute of Taxation and Institute of Chartered Accountants in England and Wales
How can we help?
If you would like to discuss the issues raised in this article in further detail or have any concerns as to the future of Capital Gains Tax, Inheritance Tax or any other personal tax matters, please contact Anthony Rose or Debbie Dolega.