Cornwall news Get ahead of the 'tax wonks' in 2021 UK news

MetiNews.Com - Peter McGahan from Worldwide Financial Planning discusses the ins and outs of tax, specifically Capital Gains Tax and its efficiency

Cornwall news Get ahead of the 'tax wonks' in 2021 UK news

MetiNews.Com - Peter McGahan from Worldwide Financial Planning discusses the ins and outs of tax, specifically Capital Gains Tax and its efficiency

Cornwall news  Get ahead of the 'tax wonks' in 2021 UK news
14 January 2021 - 12:17

Breaking News ! Tax - as interesting a subject as a talk on ethics with a politician in the freezing cold. I have nothing against tax per se, it’s the inequitable application of it, coupled with the inequitable use of that money that bothers me. Ned Flanders in the Simpsons caps it off better than any study I’ve seen, when he explains that tax is to pay for “all those who just don’t feel like paying tax, God bless ‘em”. Pure education. On the one side, you have a society where each month is a success, whilst on the other, companies and individuals fit Mr. Flanders' description as the Panama papers showed. Google that at your leisure. In 2014, Apple paid just $50 in tax per $1m profit. They go along with many others like them. Tax circulates wealth. Invisible non-tax paying hoovers in the sky do not. You may well have seen Rishi Sunak asked for a report into Capital Gains Tax (CGT) and its efficiency. On November 11, 2020, the Office of Tax Simplification (OTS) published its report into reform of this tax, the results of which, if enacted could be pretty punchy for many. You might ask why the OTS were asked in the first place, given the widely published view of them by a colleague of the chancellor, as a ‘bunch of wonks’. Either way, we have that report. What is Capital Gains Tax? On disposal of any chargeable asset (normally personal possessions worth £6,000 or more outside of your main home or car), there could be a liability. Currently, you have an annual CGT tax-free allowance of £12,300, under which you will not pay any tax. Above that, higher or additional rate, taxpayers pay 28% on gains from residential property and 20% on gains from other chargeable assets. For basic rate taxpayers, its 18% and 10%, if the gain is within the basic income band. For me, it used to be a fair tax. It had indexation allowance.

. That has gone, and the future proposals by the OTS are reasonably draconian, as they look to align income tax and CGT. That will double the tax, so if you feel you will be caught by this; take action now by visiting your accountant or financial adviser. Other recommendations hidden further down are awful: The removal of capital gains relief on death by allowing beneficiaries to inherit as today's value rather than the value at the date of the purchase. Reduction or removal of what was Entrepreneurs Relief (now Business Asset Disposal Relief) which previously allowed businesses to make a gain of up to £10m and pay 10% tax. This was reduced to £1m gain, and the proposals reduce this benefit further. To tax the interest director’s receive, as well as accrued profits owner-directors of private companies accrue inside their company - tax the company would already have paid. What can you do now? Capitalise losses and offset them against gains. There are some strange rules regarding loses made before 1996, and carrying forward unreported losses from up to four years, but your accountant will assist you with that. If you wish to make a charitable gift, gift the chargeable asset to charity. They can then make the disposal and are not chargeable. Transfer, or share assets with your spouse and make use of the two tax-free allowances. If you have savings investments in Unit Trusts or OEICS, use the gains and move into ISA's or pension where the gain is not taxable. Once inside the ISA/pension, all growth is tax-free. Finally, consider staggering disposals over time so as to keep the gains within your tax-free allowances. If you have a financial question, please call 01872 222 422, email info@wwfp.net or visit www.wwfp.net. You can also follow on Twitter or Facebook @WorldwideFP.

Source = MetiNews.Com - Cornwall

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Cornwall news Get ahead of the 'tax wonks' in 2021 UK news


Cornwall news Get ahead of the 'tax wonks' in 2021 UK news


Cornwall news Get ahead of the 'tax wonks' in 2021 UK news


Cornwall news Get ahead of the 'tax wonks' in 2021 UK news

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