One of the country’s leading tax advisers expects the announced cuts to Capital Gains Tax (CGT) allowances will lead to ‘bargain hunt Britain’, with transactions accelerated and deals likely as business owners seek to maximise returns ahead of April 2024.
The prediction comes after Jeremy Hunt confirmed in his Autumn Statement that the Annual Exempt Amount for CGT for individuals will be cut from £12,300 to £6,000 next year and then to £3,000 from April 2024.
The Chancellor also announced that the dividend allowance will be cut from £2,000 to £1,000 next year and then to £500 from April 2024, while the threshold for the 45% top rate of tax will be reduced from £150,000 to £125,140.
Becky Maguire, Regional Head of Tax in Yorkshire at Azets, the UK Top 10 accounting firm, believes business owners considering a sale in the next 12 months could expedite plans to avoid paying more.
She said: “Capital Gains Tax was widely predicted to be targeted by the Chancellor in an effort to raise up to £9bn towards the UK’s £50bn fiscal black hole. I remain sceptical that this can be achieved – with less than 1% of taxpayers contributing almost half (45%) of all CGT and four months in which to plan before April 2023.”
“With the CGT allowance set to reduce further in April 2024, we might see business owners accelerating transactions, or considering selling off some investment assets in a flurry of activity in the next four months, with potential buyers able to capitalise on cut-price deals for long-term investments.”
The Chancellor also confirmed the anticipated freeze on current levels of the income tax personal allowance, higher rate threshold, main national insurance thresholds and the inheritance tax thresholds for a further two years, until April 2028.
Becky Maguire added: “Now is the right time for business owners to consider their long-term future and start the process of reviewing and considering their succession and family estate planning strategies.”