This advice comes courtesy of Accountants Chantrey Vellacott
You may be aware that major changes are going to apply to capital gains tax from 6 April 2008. In particular there are two areas where action taken by 5 April 2008 could save you significant amounts of Capital Gains Tax and how to take advantage of relief that will disappear after 5th April.
Indexation relief
Under the present system of capital gains tax, the value of assets (including shares) is indexed from 1982 or the later date of acquisition until 5 April 1998. This prevents inflation over that period from being taxed. This relief will no longer apply from 6 April 2008, even for assets already owned. For an asset owned in 1982, indexation to 1998 effectively doubles the acquisition cost and reduces the capital gain.
It is possible to secure this relief simply by making a gift to your spouse, as gifts to spouses are deemed to take place at such a value that results in no gain and no loss, after taking indexation into account.
Business Asset Taper relief
For capital gains disposals after 5 April 2008 taper relief will cease to apply. Under the present system, business asset taper relief can reduce the effective rate of capital gains tax to 10%. Disposals after 5 April 2008 will be subject to tax at 18%.
If you have assets, including shares, that qualify for business asset taper relief and you expect to sell them in the near future, it is possible to bring forward a disposal such that the 10% tax rate applies.
Other scenarios where action may be beneficial include where the value of an asset at March 1982 was lower than the earlier base cost, or exceptionally where gains were held over between March 1982 and April 1988.
For more information and to contact Chantrey Vellacott: – http://www.cvdfk.com
