?Emergency? Budget 22 June 2010
By Francesca De Canio
According to Dr Maria Rosa De Palma, Chartered Accountant at Belluzzo & Associates, London, there has been much speculation in the media on what tax changes are likely to arise under the new Coalition Government. It has now been largely confirmed that there will be an increase in the rate of Capital Gains Tax (CGT) for non-business assets. The exact terms of the change will be outlined in the “Emergency” Budget, to be delivered on 22 June next.
From the limited information currently available at this stage it seems likely that the CGT rate will increase, from the current rate of 18%, to perhaps as high as 40% or even 50% depending on how extensive the changes are. While it is still unclear what exactly is meant by non-business assets, it is certain that second homes, art, share portfolios etc will be affected by the change. If the change is introduced then it will probably affect all assets transferred after the change becomes effective. A review of all assets should therefore be undertaken to determine the likely effect of an imminent increase in CGT rates.
In particular, any sales of assets which are expected to take place after Budget date should be reviewed to see if the date of sale for CGT purposes can be advanced to a date before the change to give a significant tax saving. It is worth mentioning that any action taken to crystallise gains before the change takes place will have to be carefully structured to give the desired result of crystallising a sale for CGT purposes.
It has also been announced that a review will be undertaken in relation to the UK taxation system for non-domiciled individuals.
It is inevitable that there will be a further tightening of perceived loopholes in the non-domicile rules but there should be time to plan for these by the time the review leads to actual changes in law. Careful consideration will however have to be given to this most significant area.
We can take some comfort that there is unlikely to be any significant change in the Emergency Budget to these rules but given current economic conditions and the frictions inherent in every coalition Government who can be certain?