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However, very little was announced in relation to changes to CGT on Budget day and in particular the Chancellor was silent on any increase in the rate of CGT. Therefore, the CGT rates remain unchanged - for the time being.
The Treasury has however announced that on 23 March (coined “Tax Day”) it will issue a number of announcements and consultations relating to tax policy. Normally these would be issued on the same day as the Budget, but this year they are being issued on Tax Day to give tax professionals and other stakeholders the opportunity to feed into consultation and policy discussions. It’s expected that none of the announcements will require legislation in the next Finance Bill nor have an immediate impact on the Exchequer.
Therefore, should the Government decide, following consultation, to make any permanent changes to any tax policy, it is likely to be in next year’s Finance Bill (2022) rather than this year.
Will the CGT rate remain at the current levels? In November 2020 the Office of Tax Simplification published its first report on the review of CGT. In the report, it was noted that the current rates of CGT are lower than standard income tax rates and it recommended that there should be a greater alignment of CGT and income tax rates. Please see TLT’s discussion of the report here.
The first report was concerned with the policy design and principles underpinning CGT, a second report is due in early 2021 exploring key technical and administrative issues.
Whilst we wait for the second OTS report and the announcements on Tax Day, it is likely that there will be some reform of CGT which will inevitably include an increase in the CGT rate at some point.
If you have any questions regarding any of this, do not hesitate to contact TLT’s Corporate Tax & Incentives team.
This publication is intended for general guidance and represents our understanding of the relevant law and practice as at March 2021. Specific advice should be sought for specific cases. For more information see our terms & conditions.
15 March 2021