Majority of advisers expect CGT changes at next Budget

Eighty-three per cent of advisers are expecting changes to Capital Gains Tax (CGT) at the next Budget, according to a study by Canada Life.

The research found that 38% of those expecting CGT rates to increase will do so in line with recent Office for Tax Simplification (OTS) recommendations.

Canada Life’s study among advisers was conducted shortly after the OTS had published a series of recommendations in its review of CGT rates, which included a recommendation to level up CGT tax rates to bring them more in line with income tax rates, while annual allowances could be reduced.

The research, which also polled 2,000 consumers, found they were a little more optimistic about changes to CGT. Twenty-eight per cent said they thought changes would be made in line with the OTS recommendations, while 10% thought there would be broader reform at some point.

“CGT is an area of tax that is ripe for reform and the recent OTS recommendations only serve to shine a spotlight on this,” commented Canada Life tax and estate planning specialist, Neil Jones. “Advisers are right to recognise likely changes are on the horizon and therefore begin thinking about their clients and ways to mitigate those changes.

“The direction of travel is clear, and advisers will be considering where client assets are invested and whether they need to recommend any changes. Depending upon client wealth, this could include ISAs, pensions and bonds. Investment bonds could have a key role to play especially if other tax advantaged investment wrappers have been utilised to the full.

“Any gains in an investment bond are rolled up, with gains subject to income tax when the money is withdrawn from the wrapper, which is a very useful tool in an advisers’ armoury.”

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