Predicting the March Budget – and the surprising significance of CGT
Michael Lansdell, managing partner at Figurit, discusses what taxpayers’ financial situation could be like in the next Budget.
November’s Budget was postponed, but now we’re looking ahead to March, with the treasury contemplating the unenviable task of trying to balance the books after the most challenging period for the economy that most of us will remember. With public spending up, also increased tax reductions and lower tax receipts due to the recession, the government will be looking at ways to raise revenue.
Pre-Covid-19, consultations had been ongoing around Inheritance Tax (IHT) and tax relief on pension contributions, with another review of business rates and Capital Gains Tax (CGT). All of these are key revenue-raising contenders, so there could be a commitment to action announced in March.
CGT - the facts might surprise you
In 2018/19, just 256,000 individuals – or less than one per cent of income taxpayers – made enough capital gains to face a CGT bill. Between them they paid £8.8bn in tax – over £3.4bn more than was collected in IHT. With CGT and IHT often being levied on the same asset (albeit at different times), that the latter was voted the UK’s most hated tax is perhaps unfair.