In its much-anticipated response to the Office of Tax Simplification’s (OTS’) reviews of capital gains tax (CGT) and inheritance tax (IHT), the government, has accepted five recommendations for reform of CGT, but has decided not to proceed with any changes to IHT for now.
“We’ve been awaiting this response for a long time. The OTS’ IHT review was commissioned in early 2018, with subsequent reports and recommendations in 2019.
“The no-change position on IHT will be a big relief for many. There was scope for significant reform, including to existing valuable reliefs such as Business and Agricultural Property Relief. But the government has taken the view that for a tax that is expected to raise £6 billion in 2021-22, for now, there will be no change.”
Five OTS recommendations for reform to CGT have, however, been accepted by government. A further five will be considered further. The changes that have been accepted by government are:
- Reporting and payment of CGT to be incorporated into the Single Customer Account.
- Extending the reporting and payment deadline for the UK property return from 30 days to 60 days (this extension was already announced in the Chancellor’s Autumn Budget).
- Extending the ‘no gain – no loss’ window for asset transfers resulting from separation and divorce, with a consultation on proposals to take place next year.
- Expanding rollover relief to cover re-investment in the form of enhancing land already owned (again there will be a consultation on the detail).
- Improvement of HMRC guidance on the UK Property Return; Business Asset Disposal Relief (BADR) for farmers or others looking to retire; land assembly arrangements; and a number of other areas.
- The OTS recommendations that will be considered further include formalisation of a real-time CGT service, practical operation of Private Residence Relief (PRR), and a review of the rules for Enterprise Investment Schemes (EIS).
Martyn Dobinson says:
“These measures seem proportionate. The Treasury could have opted for major change across the board. Instead we have some minor adjustments which, in theory, should make reporting and payment of CGT easier. Some will say that these are opportunities missed and the Treasury has not acted on the recommendations as it could have done, but, for many, this will be a relief.”