Following a request from the Chancellor, the Office of Tax Simplification (OTS) has launched ‘Capital Gains tax review - call for evidence’ plus an online survey. It wants to hear from taxpayers and their advisers about which areas of Capital Gains Tax are complex and hard to get right and suggestions for improvements.
There are two stages to the call for evidence. The first seeks high-level comments on general principles, by 10 August 2020. The second call, originally with a 12 October deadline extended to 9 November, invites detailed comments on the technical detail and practical operation of Capital Gains Tax (CGT). This second deadline should give the government time to include any changes it wishes to make to CGT in their Autumn/Winter 2020 budget.
The aim of the review is to explore ways to simplify both the technical aspects and the administration of CGT. It will focus on the following areas:
- The overall scope of the tax, the various rates which apply, reliefs, exemptions and allowances and their interaction with other reliefs.
- The treatment of losses.
- The position of individuals, partnerships and estates in administration.
- The position of unincorporated businesses, including set-up, disposal or winding up.
- The position of stand‐alone owner‐managed trading or investment companies.
- How the CGT rules affect taxpayers’ investment decisions.
- Interactions with other taxes such as Income Tax, Capital Allowances, Stamp Duty Land (SDLT) Inheritance Tax (IHT).
These are broadly split between nine different categories:
- Structural CGT: considering rates of tax, annual exemption and rules on acquisition and disposal.
- Issues commonly affecting individuals, such as Private Residence Relief (PRR) and the Chattels Exemption.
- Issues commonly affecting business owners and investors: considering features of CGT which cause barriers/distortions within the business lifecycle, e.g. on Start-up, Incorporation, Succession, Disposal and Cessation, and reliefs available to these taxpayers.
- Specific asset classes and complexities with shares, land and buildings or other assets.
- Company issues and any particular complexities which could be simplified.
- Administration of CGT: considers claims and elections, valuation, record keeping and payment of tax.
- Estates in administration: looking at how to simplify CGT for estates.
- Interaction between CGT and IHT and with other taxes: considering CGT uplift on death, CGT and capital allowances and market value disposals and reliefs.
- The wider CGT framework: considering lessons learned from history or other countries.
The online survey starts with a quiz and asks various questions about individual experiences in dealing with CGT such as type of asset disposed of, awareness of reliefs, and use of an adviser in reporting disposals.
Responses to the call to evidence should be sent to
Links
CGT: Reliefs, disposal of a business or its assets
This guide provides an outline of the main Capital Gains Tax (CGT) reliefs which may apply when an individual or company replaces or disposes of a business asset, or a business, or shares in a company.
How to calculate a capital gain or loss
Our freeview guide to how to compute a capital gain (or loss) for individuals and trustees.
Reporting capital gains: How to?
How do you report your capital gains? What return do you use? This guide sets it all out for you.
PRR: Private Residence Relief
What is Private Residence relief (PRR)? What are the qualifying conditions? Can you claim relief on two homes? How do you claim PRR? Can you claim PRR if you develop your garden? A guide for paid subscribers.
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