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A tax expert has issued a ‘sell now’ warning over a much feared tax change Labour could introduce in its October budget.
Labour has already warned that its upcoming October budget will be ‘painful’ as it looks to plug what it says is a “£22billion black hole” in the public purse.
And one tax expert has issued urgent advice to sell an asset now because of the potential for Capital Gains Tax hikes in the upcoming budget.
Mark Routen, Head of Tax at Hoxton Wealth says: “As the main taxes – income tax, VAT and national insurance for employees are protected from immediate increases the focus in the budget will be on capital gains tax, inheritance tax and pensions.
“It is speculated that the rate of capital gains tax will be aligned to income tax, this could mean an increase from 20 per cent to 45 per cent in some cases, or in respect of property 24 per cent to 45 per cent.
“If you are considering selling an asset, to put in simply, you need to take action now and look to do it before the budget.
“You do not have to complete the sale but get to the binding contract stage and this is the date that triggers the tax.”
“You could also look to rebase the cost of any asset by selling and having your spouse purchase back or moving it into an ISA or corporate structure such as a family investment company. This could trigger an immediate charge but offer a potential saving of up to 25 per cent long term.”
Mr Routen added that similar rules govern Inheritance Tax, another tax Labour is rumoured to be looking at raising.
He added: “In terms of inheritance tax, it is speculated that the reliefs available to farmers and unquoted businesses will be abolished so if you are considering a gift, you should do it now while the gifts are available. There could be changes to the rate and other reliefs as well.”