The FT has reported that:
Fears that the UK government will raise capital gains tax in its October Budget are driving a “frenzy” of activity by business owners, property investors and shareholders, according to wealth managers and tax experts.
I very strongly suspect that this is hype generated by financial advisers wanting clients to ask for expensive advice. Some wealthy people will, no doubt, be caught up in it, though.
Imagine being so enslaved by your fear of losing wealth that you were driven into a frenzy. That is the exact opposite of the freedom wealth is claimed to provide. This is wealth ensnaring those possessed of it.
The ugliness and greed implicit in that are readily apparent. But so, too, is it clear that this wealth will attract parasites - in this case, the financial advisers.
Despite this, those possessed of such wealth declare that we should aim to join them in this state of anxious, self-interested paranoia.
No, thank you.
Thanks for reading this post.
You can share this post on social media of your choice by clicking these icons:
There are links to this blog's glossary in the above post that explain technical terms used in it. Follow them for more explanations.
You can subscribe to this blog's daily email here.
And if you would like to support this blog you can, here:
Buy me a coffee!
At the moment you pay capital gains tax when you sell an asset and there are ways to not pay the full amount.
Let’s be honest if you can afford to wait until after the next election, when on present form it is difficult to see Labtory winning, there is every chance that the “increase” will be cut.
A lot of hot air from the financial services sector.
People don’t have as much control as that on when they wish to sell many assets. Real life gets in the way.
Point taken.
No doubt this “frenzy” of activity is dwarfed by the fear amongst those who are already considering how they weather the coming winter with rising fuel bills.
I smell hyperbole here. Right now, I’m getting bombarded with email ‘offers’ for high-risk VCT & EIS “Schemes” to flog to the unsuspecting. and remember my old office rule that saved many less than well off clients from losing money in unregulated collective investment schemes – the glossier the brochure, the further I throw it across the office into the bin!
Let’s face it, tax is part of life (quite rightly, too) and I use the analogy of old-fashioned paper pay slips. Everybody looks at the bottom right hand box – net pay. That is all that matters, really, especially for ‘inheritors’ – the net amount received, not the taxes paid.
That’s the right approach to those brochures
In the Eddie Murphy film “Trading Places (1983)” brothers Randolph and Mortimer Duke own a commodities brokerage firm and they try to explain to the workings of their commodities firm to Billy Ray Valentine (Murphy).
Randolph and Mortimer Duke: We make money when clients buy and sell commodities whether they win or lose in the transaction.
Billy Ray Valentine: You guys are just a bunch of well dressed bookies!
This ‘frenzy’ of activity amounts, as I understand it, to selling assets at a profit before such profit generates more tax than is the case now.
Given that the assets can only be sold to a buyer, why would the buyers pay enough to justify the sale? Or is it just another sleight of hand? Sell now at an inflated price within a network, in order to sell again after CGT increases, at a loss.
The price will presumably not alter because of the timing of the sale (although coming close to deadline there will a downward pressure on the price). And sales between related parties of the sort you imply are not taxed at sale price but at value.
Alternatively it is called getting your house in order. Besides the tax take will almost certainly fall post the increase in tax rates as people will just defer sales. Far more money will be raised by closing the ability to make gifts tax free if the benefactor lives 7 years and thus avoid IHT. This is much more sensible.
People do not defer most sales: real world need for money, or to sell the business, or retire, or whatever, prevents that. And you would need to prove your data on IHT.
What is the point of being rich if it “forces” you to leave your home? Tax is just the price you pay to live where you want.
On the other hand a little extra CGT might keep the pitchforks from the door………….
If this sounds ultra cynical, then I do not apologise, but if you faced having less money with which to bribe politicians, you might get upset too!
According to an LSE study I saw yesterday less than 1% of adults pay CGT in any year. There is apparently also more CGT paid by residents of Kensington than the entirety of Wales. This is a tax that affects almost nobody other than the rich in the South East, so expect a lot of very loud shouting in things like the FT and Telegraph.
That data is correct
There is no “frenzy” or panic, that I can see, not yet anyway. But anyone that owns assets standing at a gain – which might be shares in a family company, or a holiday home, or some other investment – and who has control over the timing of their disposal will be giving serious consideration to accelerating any plans to implement them before 30 October 2024 or before 6 April 2025. So tax advisers and lawyers and accountants are busy giving advice just in case.
Rates of CGT are at historically low levels so any change is likely to increase the tax payable, and I expect there will be anti-forestalling rules. So there is significant downside risk (from the point of view of a person who might have less post tax proceeds to use) and also uncertainty.
The rate of CGT needs to be increased – as it was by the Conservatives in the 1980s. We can expect some latent gains to be flushed out this year and then there will be a temporary dip for the following year or so until people get used to the new rules. Waiting for four or five years for another change will not be realistic for many people.
Spot on Richard….the paranoia of greed. So mega-destructive of us all.
“This planet has – or rather had – a problem, which was this: most of the people living on it were unhappy for pretty much of the time. Many solutions were suggested for this problem, but most of these were largely concerned with the movement of small green pieces of paper, which was odd because on the whole it wasn’t the small green pieces of paper that were unhappy.”