News and views from Lane-Smith & Shindler

The new coalition government’s first Budget will take place on 22 June. It is expected that the rate of capital gains tax on non-business assets will increase, so that capital gains are taxed at the same rate as income. The top rate of tax will probably be 40%, in addition to which the capital gains tax annual exemption may be reduced. Currently, the rate of capital gains tax on all assets is 18% and each person has an annual exemption of £10,100.

It is not clear when these changes will take effect. Most probably, these changes will take effect from 6 April 2011. However it is possible that the changes will take effect from 22 June 2010. It is very unlikely, although not impossible, that the change will be backdated to 6 April 2010.

In order to take advantage of the current rules, you may want to consider crystallising any unrealised gains as soon as possible. You may already be doing this with any quoted stocks and shares you hold. You may be unsure if, or how, you can also crystallise unrealised gains on other assets e.g. investment properties, second homes, and/or shares in private (unquoted) companies.

Unrealised gains on such assets can be crystallised by means of a sale or gift between family members, or to a family-owned company or trust. However there are wider implications (including tax implications) to consider e.g. inheritance tax may be or become due on gifts that you make.

If you would like to discuss these issues with a view to devising an appropriate tax-saving strategy then please get in touch.