Capital gains tax to rise under coalition government

[WinstonSmith]

"The CGT paid on ‘non business’ assets such as shares and second homes, currently a flat 18% rate, is likely to rise close to the 40% rate of income tax."

Ouch.

http://www.citywire.co.uk/professional/-/news/other/content.aspx?ID=399144

 

[donaldduke]

"The CGT paid on ‘non business’ assets such as shares and second homes, currently a flat 18% rate, is likely to rise close to the 40% rate of income tax."

Ouch.

http://www.citywire.co.uk/professional/-/news/other/content.aspx?ID=399144

anyone know if this is coming in straight away or from next april?

 

[scose-no-doubt]

No details yet mate. Time to go incorporated mofos!

 

[WinstonSmith]

anyone know if this is coming in straight away or from next april?

It looks like it might be imminent.

http://www.ft.com/cms/s/0/acfee9d4-5db6-11df-b4fc-00144feab49a.html

 

[maiden22]

It looks like it might be imminent.

http://www.ft.com/cms/s/0/acfee9d4-5db6-11df-b4fc-00144feab49a.html

Usually it wouldn't be until the new tax year, although in recent years this convention has been cast aside on a number of occasions. The reports that I have seen suggest it will be 2011, although of course CallMeDave could claim that it is imminently necessary due the crisis etc etc. Tax rises to fuel government expenditure being, as we all know, the best solution to our current woes.

Investors might groan at the change, so soon after the last change. But of course nobody cares about them - their fault for daring to hoard money.

 

[donaldduke]

I cant see it being rushed in, but you never know.

if they don't re-introduce indexation/inflation relief for long term investors this is going to be one nasty tax.

 

[N Rothschild]

what the ****, time to go offshore big time

 

[scose-no-doubt]

I cant see it being rushed in, but you never know.

if they don't re-introduce indexation/inflation relief for long term investors this is going to be one nasty tax.

I've got a feeling that it's gonna be maybe higher personal allowance and extended basic rate of CGT for purchases > x years

Bringing back taper relief would be a bit of a nighmare after the past few yrs to be honest.

 

[maiden22]

a bit of a nighmare

HMRC doesn't generally consider that side of things .

 

[scose-no-doubt]

Yeh but you'd have to have taper up until 2007 or whenever, then no relief until 2010, then another relief. If they introduce a new system or taper now then it can only apply to new purchases eh.

Doesn't bother me I'll get more work. Had plenty of smug a55 clients who were made up to swallow the 18% gain cos they could do the computation themselves. Now once again it'll be tax-efficient group incorporation that riverdances through the legislation. Mwah-hah-hah hahaaaaa

 

[arabianights]

I don't really see why CGT shouldn't be equal to income tax in the first place, frankly.

And if you trade for a living you aren't going to be affected, at least if you do it right - invest for a living and maybe you more of a problem...

(Obviously as a basic principal I hold all tax to be theft, but for god's sake, this could literally be the most wonderful government so far, about as close to libertarinism as you can get. Read the lib-con pact... take one example from it: Great Repeal Bill - google that and you'll cream yourself)

 

[sinimini]

Creamed.

 

[scose-no-doubt]

I don't really see why CGT shouldn't be equal to income tax in the first place, frankly.

And if you trade for a living you aren't going to be affected, at least if you do it right - invest for a living and maybe you more of a problem...

(Obviously as a basic principal I hold all tax to be theft, but for god's sake, this could literally be the most wonderful government so far, about as close to libertarinism as you can get. Read the lib-con pact... take one example from it: Great Repeal Bill - google that and you'll cream yourself)

Who the f would pay for road and public lighting etc? :S

CGT is basically on investment which can bring longer term benefit non? Housing for someone, keep a company going and creating jobs etc. taking pressure of the state.

Why shouldn't you get better tax treatment for that kind of activity over the simple lining of your own pockets?

For the record I think this government is/will be a crock of sh1t. But then maybe if I had a mil in the bank I'd feel different. c'est la vie.

 

[m!chael]

And if you trade for a living you aren't going to be affected, at least if you do it right ...

Please forgive my newbie ignorance - but why's that, then? Is it not the case that all net profits from a trading account (apart from dividends) are taxable as capital gains?

Are you assuming that anyone trading for a living is doing it via a corporation?

<curious>

cheers,
m!chael.

 

[scose-no-doubt]

Please forgive my newbie ignorance - but why's that, then? Is it not the case that all net profits from a trading account (apart from dividends) are taxable as capital gains?

Are you assuming that anyone trading for a living is doing it via a corporation?

<curious>

cheers,
m!chael.

trading gains are assessable as income by HMRC and as such, are taxable under income tax legislation rather than capital gains.

All depends on frequency of trades, other sources of income etc etc

 

[donaldduke]

trading gains are assessable as income by HMRC and as such, are taxable under income tax legislation rather than capital gains.

All depends on frequency of trades, other sources of income etc etc

i think it depends more on if you are directional trading or not.

 

[scose-no-doubt]

Directional? Then what if you live from arbing?

 

[m!chael]

So from what's been said, it seems to me that if you make your primary living from trading and trades are fairly frequent, HMRC are likely to take the view that your profits are income and not capital gains. Makes sense.

If that's the case, then regardless of an increase in CGT, surely incorporation is the only sensible way to go as a serious individual trader? Profits taxed at 21% (up to £300k/year) rather than 40% (until you decide to withdraw them, when they're taxed at 20% as dividends) should lead to much more rapid compounding account growth!

 

[donaldduke]

Directional? Then what if you live from arbing?

directional trading is most likely capital gains tax. this is because the courts have said directional trading in a personal account is more like gambling than carrying on a trade, even if you do hundreds of 'trades' a year.

arbing, market making, earning the spread, filling customer orders is more likely to come under income tax for personal accounts.

 

[scose-no-doubt]

So from what's been said, it seems to me that if you make your primary living from trading and trades are fairly frequent, HMRC are likely to take the view that your profits are income and not capital gains. Makes sense.

If that's the case, then regardless of an increase in CGT, surely incorporation is the only sensible way to go as a serious individual trader? Profits taxed at 21% (up to £300k/year) rather than 40% (until you decide to withdraw them, when they're taxed at 20% as dividends) should lead to much more rapid compounding account growth!

Offshore incorporation would probably be best but I'm yet to have a chance at dealing with one in practice so not at all sure of the ins and outs. Trusts are now out of the window cos of all the IT contractors milking it lol.

Hell of a lot of paper work involved in offshore but I suppose you can pay a specialist company to deal with it and its well worth it if you're making serious cake.