As usual the Budget speech and headlines about CGT were brief, but more detail is available from the HMRC web site and other sources, including a useful Q&A page, which immediately answered one key question for Charles Olley, the tax partner at Price Bailey Chartered Accountants.
“Did the Chancellor really mean that basic rate income tax payers would pay CGT at 18%, and those paying income tax at higher rates would pay CGT at 28%?”
Charles commented: “Not surprisingly, George Osborne didn’t mean that. What he meant to say was that that if your income is below the limit of the basic rate band (often £43,875) gains up to the unused amount of the band are chargeable at 18%. Any of the gains that exceed any unused amount of the basic rate band are chargeable at 28%. If your income uses up the whole of your basic rate band all your gains are charged at 28%.
He added: “Obvious really, it was too much to expect that someone with no income but £1m of gains would get to pay their tax at only 18%. But that was what he said.”
The Chancellor’s plans for tackling the UK deficit are now well under way.Price Bailey’s free budget report uncovers some of the key measure as well as the less publicised changes that are most likely to affect your business or your personal finances.
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