The UK's financial landscape has been witnessing a significant shift, particularly in the realm of taxation. One of the most notable changes is the steady rise in the number of taxpayers subject to Capital Gains Tax (CGT) ...
The primary catalyst behind the surge is the Chancellor Jeremy Hunt's decision to slash the annual exempt amount. This is the threshold of capital gains an individual can accrue before they're liable to pay CGT. In a move that has taken many by surprise, the rate was cut from £12,300 to £6,000 in April.
But the reductions don't stop there. Come April 2024, this amount is set to plummet further to a mere £3,000. I feel we are on the brink of an 'explosion'. With such drastic reductions in the annual exempt amount, it's no wonder that taxpayers are feeling the pinch.
Over the past 12 months, there's been a noticeable exodus of landlords. Why? The tightening tax laws are making buy-to-let properties a less enticing investment. As more landlords opt to sell up, the CGT coffers are naturally swelling. Interestingly, CGT now overshadows inheritance tax in terms of revenue, with the latter's annual bill standing at just over £7 billion.
It's not just individual taxpayers and landlords who are grappling with the CGT changes though. Business owners are also feeling the heat. The lifetime limit for Business Asset Disposal Relief, a significant relief for many entrepreneurs, has been slashed from £10 million to just £1 million.
The landscape of UK taxation is undeniably evolving. As the annual exempt amount for CGT continues to shrink, and as tax laws tighten, it's crucial for individuals, landlords, and business owners to stay informed and adapt their financial strategies accordingly.
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