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Delay Possible for Capital Gains Tax Reform

6th March 2008 | back to article listings BACK    print this article PRINT

Stuart Law, Chief Executive of Assetz, predicts the Chancellor could well announce a delay for proposed capital gains tax reforms in next week’s budget:

“Following Darling’s rather ill-conceived and rushed changes for capital gains tax, highlighted in his pre-budget report last year, I believe there is a significant possibility that he will announce a delay to this proposed reform next week.

“The Chancellor does not seem to be concerned about announcing the details of the changes just days before they would otherwise be implemented, however it is potentially illegal under European law to make this change applicable, without providing an acceptable notice period for all those likely to be affected.

“Fuelled by hints from the Chancellor himself, that his initial plans are subject to change, enforcing the revised 18% tax from April this year would not allow sufficient time for business owners and individuals such as property investors with potential capital gains to get their affairs in order and as a result would leave the Government open to a Judicial Review or investigation by the European Courts. As I see it, Darling will have to either scrap this proposal or perhaps more likely, delay its introduction.”

STAMP DUTY SHOULD BE MADE AN EXIT FEE

Stuart Law, adds:

“The current, lower stamp duty threshold offers little reprieve for the majority of the nation’s struggling first time buyers, with the average property price well in excess of £200k. In an attempt to ease the financial burden on those looking to buy their first home, and to maintain a steady flow of this essential buying group, I would propose that the Chancellor opts to make stamp duty an exit as opposed to an entrance fee to the market. 

“By making stamp duty payable on the sale price of an existing property, rather than the property which is about to be purchased, first time buyers will be encouraged to enter the market. Those looking to move up the ladder are also likely to be enthused by the possibility of a lower tax, encouraging movement in the market, without Government having to increase the existing, lower threshold.”

 

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