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CGT Review

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    CGT Review

    In October this year, I received a full distribution from liquidating my company. I plan to apply for ER on my personal tax bill for this tax year's income.

    Does anyone know if the recommendations in this review are implemented, that I would be affected?

    Capital gains tax: Rate should double, says government review - BBC News

    I've asked my accountant and liquidator but both have said no, that the tax won't be back-dated, but I'm not confident in their response. Since personal tax is calculated for a given tax year, and paid the following one, wouldn't I be impacted by possible tax changes?

    #2
    Originally posted by heyya99 View Post
    In October this year, I received a full distribution from liquidating my company. I plan to apply for ER on my personal tax bill for this tax year's income.

    Does anyone know if the recommendations in this review are implemented, that I would be affected?

    Capital gains tax: Rate should double, says government review - BBC News

    I've asked my accountant and liquidator but both have said no, that the tax won't be back-dated, but I'm not confident in their response. Since personal tax is calculated for a given tax year, and paid the following one, wouldn't I be impacted by possible tax changes?

    What would you do if you are affected?
    What would you do if you're not affected?
    What difference will it make to your actions when you receive the funds?
    …Maybe we ain’t that young anymore

    Comment


      #3
      Originally posted by WTFH View Post
      What would you do if you are affected?
      What would you do if you're not affected?
      What difference will it make to your actions when you receive the funds?
      I already have received the funds.

      Affected: set aside cash for tax
      Unaffected: invest in property
      Last edited by heyya99; 12 November 2020, 14:10.

      Comment


        #4
        CG Tax is based on the transaction date. Besides, there isn't any noise about removal of BADR / ER. They already nerfed it last time.

        If your distribution has been made then you can apply for BADR (ER) on it.

        I find it disturbing that you don't trust the same answer that you received from both the accountant and the liquidator, and instead have come here to ask a random group of computer nerds.

        Comment


          #5
          Originally posted by ChimpMaster View Post
          CG Tax is based on the transaction date. Besides, there isn't any noise about removal of BADR / ER. They already nerfed it last time.

          If your distribution has been made then you can apply for BADR (ER) on it.

          I find it disturbing that you don't trust the same answer that you received from both the accountant and the liquidator, and instead have come here to ask a random group of computer nerds.
          This is correct - The more interesting question is whether people are thinking now of moving their assets from personal to Ltd or vice versa for the following two reasons - I am thinking specifically of property assets:

          1) CGT tax rates are bound to go up so paying 28% of the gain locks that in and the gains have been realised and the slate wiped clean

          2) Ltd incorporation allows rental income to be staggered / throtled and therefore only subject to 19% corp tax rather then 40% tax

          3) Now seems like a cheap time because of stamp duty holiday although you will have to pay 3% SDLT

          Comment


            #6
            Originally posted by ChimpMaster View Post
            I find it disturbing that you don't trust the same answer that you received from both the accountant and the liquidator, and instead have come here to ask a random group of computer nerds.
            This (no disrespect to posters on this forum )

            Comment


              #7
              Originally posted by ChimpMaster View Post

              I find it disturbing that you don't trust the same answer that you received from both the accountant and the liquidator, and instead have come here to ask a random group of computer nerds.
              Just need to look who the OP is. (disrespect to the posters on this forum )
              'CUK forum personality of 2011 - Winner - Yes really!!!!

              Comment


                #8
                Originally posted by northernladuk View Post
                Just need to look who the OP is. (disrespect to the posters on this forum )
                If you are struggling I can give you a sub? It's not like I don't have lots of it to spare

                Comment


                  #9
                  If you read the OTS report you can see that ER is also within their sights and their recommendation is that any retained earnings should only be extracted at income tax rates


                  See section 3.79
                  "One solution would be to tax some or all of the retained earnings remaining
                  in the business on liquidation or sale at dividend rates – in effect shifting the
                  boundary between Capital Gains Tax and Income Tax in these situations. This
                  could create make the treatment of cash taken out of the business during
                  and at the end of its life more neutral"


                  Given the state of UK finances it wouldn't surprise me if we see these recommendations implemented at the next budget which would mean the end of ER, regardless of what happens with the CGT rates

                  Comment


                    #10
                    Originally posted by dingdong View Post
                    If you read the OTS report you can see that ER is also within their sights and their recommendation is that any retained earnings should only be extracted at income tax rates


                    See section 3.79
                    "One solution would be to tax some or all of the retained earnings remaining
                    in the business on liquidation or sale at dividend rates – in effect shifting the
                    boundary between Capital Gains Tax and Income Tax in these situations. This
                    could create make the treatment of cash taken out of the business during
                    and at the end of its life more neutral"


                    Given the state of UK finances it wouldn't surprise me if we see these recommendations implemented at the next budget which would mean the end of ER, regardless of what happens with the CGT rates
                    I wouldn't worry about it just yet. Especially as the paragraph hasn't been been proof-read.

                    ER/BADR was nerfed last time rather than removed entirely because most of the tax advantage was at the £1m+ level. By retaining a lifetime £1m allowance the government still wish to encourage some entrepreneurship (well, so they say...).

                    Comment

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