Rishi Sunak insists UK will not return to austerity
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The UK economy looks set for a more positive end to 2021 as business confidence hit highs not seen since April 2017. Employers in England’s North West and East registered the biggest jump in confidence, the latest Lloyds Bank Business Barometer found. While some accepted that staff shortages in certain industries remain a challenge, optimism for an economic recovery is high.
Despite the good news, Chancellor Rishi Sunak is still looking to use tax reforms to raise funds to pay for spending throughout the pandemic.
This has sparked a debate regarding the best way to do this.
Many have clamoured for wealth taxes, such as capital gains tax and inheritance tax, to be changed to help rake in funds for The Treasury.
Recent reports have suggested that capital gains tax could be aligned with income tax.
Mark Selby, National Head of Corporate Finance with Azets, the UK’s largest regional accountancy firm and business advisor to small and medium-sized businesses, warned business owners to act soon to avoid a potential hike.
Capital gains tax news: Sunak could rake in more in taxes (Image: getty)
Capital gains tax news: Sunak could align CGT with income tax (Image: getty)
He said in July: Rumoured changes to Capital Gains Tax haven’t happened yet but, politically, it remains a soft target and we consider there to be a relatively high likelihood of reform this autumn or in spring 2022.
“Business owners who are already planning to sell or exit their business should consider accelerating plans and speaking to an advisor sooner rather than later to mitigate the risk of a significantly increased tax liability.
“For many businesses, the pandemic has presented opportunities to trade at or above normal levels and demonstrate a strong, resilient business model.
“However, delaying a sale to fulfil growth ambitions might be futile if value growth is outweighed by tax increases.”
In the last tax year of 2019-2020, HM Revenue & Customs collected record amounts of capital gains tax as experts predicted this figure would continue to rise.
Capital gains tax news: The UK economy is bouncing back (Image: getty)
The Government collected £9.9billion from the wealth levy last tax year, representing a rise of three percent.
This came despite the number of people actually paying the tax decreasing – this figure fell by six percent to 265,000.
Most capital gains tax comes from a small number of taxpayers who make large gains.
In 2019-20, 41 percent of capital gains tax came from those who made gains of £5million or more – a group which represents less than one percent of levy’s taxpayers.
Analyst at AJ Bell, Tom Selby, told Express.co.uk earlier this month that it is “very possible” capital gains tax will be aligned with income tax.
He added: “The Office for Tax Simplification’s proposals edged towards aligning the two taxes.
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Capital gains tax news: An expert urged business owners to act soon (Image: getty)
Capital gains tax news: ISA information (Image: getty)
“The impact of that would be someone disposing of an asset would pay significantly more tax than they do at the moment.
“There would be a big impact on landlords for example, people who have second properties.
“At the moment capital gains tax is charged at 10 percent or 20 percent depending on whether you are a lower rate or higher rate taxpayer.
“If this was aligned with income tax, you would be looking at a tax rate of 20 percent, 40 percent or even 45 percent.
“So if you went down that route, anyone with significant assets or multiple properties could see a big impact on the value of their property.”