A new report has been published by The Office of Tax Simplification (OTS) looking at improving government policy design and the principles underpinning Capital Gains Tax (CGT).
In July 2020, the OTS was asked by the Chancellor Rishi Sunak to conduct a review of Capital Gains Tax, asking them to identify opportunities relating to administrative and technical issues. Also, to at look areas where the present rules can distort behaviour or do not meet government's policy intent.
Sunak asked that the report includes a review of its use in the acquisition and disposal of property and the practical operation of principal private residence relief.
The review has been described by Blick Rothenberg as an inevitable tax raid in recouping some of the money spent during the Covid-19 lockdown period and the changes could potentially be bad news for investors.
There was a drop in CGT in the 2016 budget apart from property where the 18% dropped to 10% and the 28% rate dropped to 20%.
Many features of CGT could distort behaviour including its boundary with Income Tax and interconnections with Inheritance Tax the first report found.
Following early next year, a second report will explore key technical and administrative issues.
Capital Gains Tax on death and Capital Gains Tax rates at full income tax rates. This is a covid-19 tax or coronavirus tax - see our video: Capital Gains Tax on Death.