News & Bulletins

Tax Alert!

Christine Green, Partner in the Private Client Department draws clients’ attention to a potential tax saving loophole arising out of the Chancellor’s pre-budget statement.

The Chancellor’s proposed changes to the Capital Gains tax regime have been much discussed.  There will be some winners and losers in the process and clients are advised to discuss with their brokers and financial advisers whether it is in their interests to sell or retain stocks carrying heavy gains.  In general it is probably wiser to base decisions about your portfolio around investment strategy rather than tax saving. 

As many of us now know, the Chancellor is about to introduce a flat rate of capital gains tax at 18%.  At the same time, he will abolish indexation and taper relief.  In many cases, where assets have been held for a long time, the loss of taper and indexation will mean that tax payers are paying at a higher rate of tax.  However, for married couples and civil partners it may be possible to preserve indexation if steps are taken before 6th April 2008.

If an asset was purchased after 1982 and before 1998, it is possible for it to be transferred from one spouse to another free of capital gains tax.  The transferee spouse takes the asset subject to the indexation allowance and the value of the asset will be re-based at that point.  Thus, if the asset is sold in the future, it will be at the new rate of 18% but indexation would be allowed.

Clients are recommended to seek advice before embarking on this tax saving measure but it could be important for individuals who have owned shares or property since 1982 carrying a heavy gain.

If you wish to discuss this further please contact one of our private client team whose details are shown on the website but hurry – this window of opportunity will close on 6th April 2008.

Christine Green
Partner Private Client Department

Date:  February 2008

back to News & Bulletins