Those new CGT laws...

[Olf]

So have the great and good accountancy folks had time to chew on the new CGT regs?

If so do you have any nuggets to share?

I'm particularly interested in the aspects of company disposal/disolution and distribution of proceeds to shareholder.

[Eric Mc]

Too general a question without knowing specific details.

If sold or disposed of before 5 April - full Indexation and Taper Relief available - remaining taxable proceeds taxed at individual's top rate of Income Tax.

After 5 April 2008 - no Indexation or Taper Relief but taxed at a new special CGT rate of 18% if a non-business asset and 10% if a busines asset (subject to a lifetime ceiling of business disposals netting gains up to £1 million).

[Olf]

Thats fine Eric, all the info I needed. The issue of disposals was covered only by a note in the original release and as you said at the time 'the devil is in the detail'. I wondered if it had become more complex since reading that detail.

Have you seen any calculations anywhere comparing how a businessman disposing of an asset would fair under the old reg and new?

The application of taper relief was quite technical and I presume that most people will still be worse off under a flat 10% than they would under the convoluted taper relief calculation.

If say I were closing a business with 100,000 pounds of post corp tax post winding up cost assets...

I the new rule would be that any gain over and above the CGT allowance for that year would attract a flat rate of 10% up to a lifetime limit. So in this case on 100k of gain you'd pay 10k CGT.

Under the old rules, as long as the asset had been owned for more that 3 years I believe indexation would play a role and this is not applicable under the new regs.

Edited by Olf on Tuesday 12th February 14:00

[Wings]

Eric Mc said:

Too general a question without knowing specific details.

If sold or disposed of before 5 April - full Indexation and Taper Relief available - remaining taxable proceeds taxed at individual's top rate of Income Tax.

After 5 April 2008 - no Indexation or Taper Relief but taxed at a new special CGT rate of 18% if a non-business asset and 10% if a busines asset (subject to a lifetime ceiling of business disposals netting gains up to £1 million).

Should that not be;
After 5 April 2008 - no Indexation or Taper Relief but taxed at a new special CGT rate of 18% if a business asset and 10% if a non-busines asset (subject to a lifetime ceiling of business disposals netting gains up to £1 million)

[wattsm666]

I believe it is possible to transfer assets to your wife/husband, pre 5th April 2008, which will be a nil gain/nil loss transaction and will preserve indexation and taper relief. Maybe worth taking advice on this.

[Eric Mc]

Wings said:

Eric Mc said:

Too general a question without knowing specific details.

If sold or disposed of before 5 April - full Indexation and Taper Relief available - remaining taxable proceeds taxed at individual's top rate of Income Tax.

After 5 April 2008 - no Indexation or Taper Relief but taxed at a new special CGT rate of 18% if a non-business asset and 10% if a busines asset (subject to a lifetime ceiling of business disposals netting gains up to £1 million).

Should that not be;
After 5 April 2008 - no Indexation or Taper Relief but taxed at a new special CGT rate of 18% if a business asset and 10% if a non-busines asset (subject to a lifetime ceiling of business disposals netting gains up to £1 million)

The new CGT is 18%. That was originally going to apply to all disposals after 5 April 2008. After much pressure from business bodies and tax/accountancy bodies etc, Darling announced a few weeks ago that a special lower CGT rate of 10% would apply to business asset disposals - up to a lifetime limit of £1 million worth of business asset disposals.

Edited by Eric Mc on Tuesday 12th February 18:22

[srebbe64]

It's also worth noting that indexation is being abolished. I'm meeting with a CGT expert next week who's going to go through all the small print with me in some detail.