There has been plenty in the press over the last few days about the rumoured increase in Capital Gains Tax – expected to be announced in the 22 June Budget by Mr Osborne.
The rumours on the change from the current 18% rate suggest an increase to 40% or even 50%.
The Guardian reported yesterday a glut of people rushing to sell their second homes or buy-to-lets in an attempt to beat the (rumoured) increase.
Our view is that Yes there will be an increase. The effective date will most likely either be midnight on 22nd June or from 6th April 2011. However it is worth highlighting that the tax payment on any sale before 5th April 2011 will no be due to be paid over to HMRC until 31 January 2012, and if the increase is effective from 6th April 2011, then HMRC won’t see the cash until 31 January 2013 (will the coalition still be in power then?). Some commentators have suggested that the increase could be backdated to the start of this current tax year (6th April 2010) – but this is unlikley as it would contravene European Human Rights Laws for the taxpayer.
Of course, Mr Osborne could surprise us all and levy CGT increase only on the most wealthy.