Clear House Accountants
Contact
Clear House Accountants
  • About Us
  • Services
    • Accounting Services
    • Business Advisory
    • Business Support
    • IT Services
    • Marketing Consulting
    • Payroll
    • Service Charge
    • Tax Services
    • VAT Services
  • Locations
    • Accountants in London
    • Accountants in Stanmore
    • Accountants in Harrow
  • Resources
    • Growth Portal
  • Partners
  • Contact
  • Blog
  • Switch Accountants
Capital Gain Tax Regime Fair
04 Oct

Is the current CGT regime fair?


By:   David Daniels Tax Blog Comments:   No Comments

A major think tank thinks the current CGT regime is a tool for the wealthy to pay less tax

Landlords should brace themselves, as a major think tank has recently raised concern on the rising inequality due to unjust rates of capital gains tax (CGT) enjoyed by the wealthy class on the income they earn through sales of assets and shares against the income tax that is levied on the income earned by hard-working individuals. If you own a property and are thinking about selling it, your first point of contact should be to look for highly competitive Accountants in London.

The propositions put forward by the Institute of Public Policy research are expected to spark resentment among property investors, who are currently enjoying the perks of low tax on their income earned through the buying and selling of properties. A highly competitive property accountant should be able to help you save tax if you are selling your property.

Though there has been a significant increase in CGT over the past two years, the think tank still believes in calling out for a greater increase in the rate of CGT applied on properties and shares. The statistics published by HMRC reveal that the UK government was able to pocket a record £9.2 Billion in their national treasury from CGT rate changes during the year 2018-2019.

The Institute of Public Policy Research projects that the government can accumulate over £120bn over the period of next 5 years in revenues if it were able to tax the income earned from wealth in the exact same manner as they tax the income earned from working. Though, there is a good chance that the figure might drop to £90bn depending upon behavioural impacts.

They also highlighted that the tax rates levied on the profits made from selling a property, owning shares and rents would not be considered fair if compared to the income tax regime, and will only trigger greater inequality within the society in the long run.

Currently, property owners pay 10% (18% on sale of residential properties ) of CGT as basic rate taxpayers whilst they pay 20% (28% on sale of residential properties) as higher rate taxpayers, which in comparison, is unfair to the income tax, that charges 20% for the basic rate taxpayer and a hefty 40% for the higher rate taxpayer. If you have multiple incomes and are not sure how it impacts your tax position you should contact your tax accountant and if you do not have one try searching for a tax accountant nearby.

Capital Gain Tax

This implies that a landlord with capital gains of £50,000 would pay much less tax as compared to the person who has the same level of income but earned through regular employment in the UK. IPPR argues that this is not healthy for the economy in the long term and has the potential to encourage tax avoidance practices.

With annual CGT exemption for all of the taxpayers amounting up to £12000, IPPR has also proposed to cut down this exemption to only £1000, IPPR aims to push the government to drive up the CGT to 20% from 10% for basic rate income taxpayers, whilst 40% to 45% for higher rate income taxpayers.

Institute of Public Policy Research wants to equalise wealth distribution between the population and ensure that every individual residing in the UK does not escape from the tax net and pays their fair share of tax. They plan to do this by recommending to the government to shift the tax burden more towards the wealthy class- property owners, savers and investors. If you are a taxpayer and want to plan to pay only what you should be paying in taxes you should find a tax accountant.

One argument provided by the director of IPPR is that their propositions have been suggested in order to promote fairness. They believe that it is very unfair that people who gamble on stocks and shares in the stock markets or invest in property get to pay less tax as compared to the people who dedicate a lot of time and effort to fulfil the responsibilities of regular employment just to make ends meet.

The think tank believes that the proposals they suggest will introduce equality within the social and economic infrastructure but they are somewhat ignoring the fact that most of the investors and savers are already paying tax on their income from work. They carefully invest their savings into assets for future security and might be ready to pay more taxes as they earn more through their investments and property gains over time. 

It’s not only the landlords that will be affected but a common taxpayer who struggles hard enough to earn and save enough for investing in a stable asset will also have to pay a higher CGT than it was ever before. Claiming legitimate tax reliefs is the right of every individual who works hard to make money, it is advisable to hire a competitive tax accountant so that you can maximise the tax reliefs you can claim.

Clear House Accountants are expert Accountants in London, our highly trained team of tax accountants have been trained to identify the key areas where they can help you and your business save tax and improve cash flows.

You might also want to read this: 

Sole Trader vs Ltd- the Tax Differences
How to Appeal to the Tax Tribunal?
Understanding Corporation Tax for Businesses

Leave a Comment Cancel reply

Categories

  • Blog
  • Compliance Blog
  • General Blog
  • Growth Blog
  • Infographics
  • Small Business Advice
  • Startup Blog
  • Tax Blog
  • Updates

RSS RSS Feed

  • Alphabet Shares: Tax Planning, Opportunities and Obstacles March 5, 2021
  • The Final Countdown for Domestic Reverse Charge: All You Need to Know February 25, 2021
  • Best Business Bank Accounts for the Year 2021 (Updated) February 19, 2021
  • Top Home-Based Business Ideas that You can Start in 2021 February 18, 2021
  • Self Assessment Tax Return Deadline: Avoid the Last-Minute Panic January 15, 2021

Clear House are Accountants in London, that provide services to startups, sole traders and SMEs

Find More Information

About Us

  • Home
  • About Us
  • Growth Portal
  • Blog
  • Contact
  • Referral Program
  • Privacy Policy

Our Offices

London Office
Harrow Office
Stanmore Office

+44 (0)207 117 2639
info@chacc.co.uk

Copyright 2010-2021 © A Firm Registered in England. Clear House Accountants. All rights reserved.

This website uses cookies to improve your experience. We'll assume you're ok with this, but you can opt-out if you wish. Cookie settings
AcceptReject
Privacy & Cookies Policy

Privacy Overview

This website uses cookies to improve your experience while you navigate through the website. Out of these cookies, the cookies that are categorized as necessary are stored on your browser as they are as essential for the working of basic functionalities of the website. We also use third-party cookies that help us analyze and understand how you use this website. These cookies will be stored in your browser only with your consent. You also have the option to opt-out of these cookies. But opting out of some of these cookies may have an effect on your browsing experience.

Necessary
Always Enabled

Necessary cookies are absolutely essential for the website to function properly. This category only includes cookies that ensures basic functionalities and security features of the website. These cookies do not store any personal information.

SAVE & ACCEPT