Budget 2021 and upcoming CGT tax changes in UK

Hi people,

I recently realised that Rishi Sunak, chancellor of the Exchequer, is urged to pass new changes related to CGT in the next budget day on 2-3 March 2021.

Right now, CGT status is as follows: £12300 in profits tax free per financial yer, then any profits above that threshold taxed at 10% for lower income earners or 20% for higher income earners.

It is rumoured that Sunak might propose to raise the 20% up to 40-45%, and LISTEN TO THIS, potentially reduce the CGT threshold from £12300 down to even £2000.

If this happens, I am literally toasted. This year I am already maxed out my $12300 threshold, and I still have a huge bunch of shares waiting to sell them after 5 April and put them in the ISA (yes I am stupid and I opened the ISA after I did those purchases, didnt predict those shares will rise so much…). Plus I own a fair amount of crypto which obviously sits outside the ISA.

What’s your thoughts on these potential changes?

I have a fear that ‘scrapping ISA benefits’ might be on the table too. Do you think those clowns might come and say ‘Ohh, the CGT free ISA benefit will be scrapped, and now any investmenets within the ISA will be subject to CGT’ ??? I am terrified with these clowns.

Any thoughts very much appreciated…

I’d like to say I can’t see a Tory government going for massive taxes on investment, but I’d also have assumed a Tory government wouldn’t print money like it was going out of fashion so…

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Just had a google. The Express have run a story mentioning this, using typical clickbait tactics. The Times’ reporting on the matter is much more balanced:

“It seems unlikely that the chancellor would do anything to harm business growth, so a full-on raid on capital gains may be out of the question.”

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there is absolutely no way the CGT allowance is going down to £2000.
Worst case scenario it’ll go down to £10,000.
I actually support a sensible reduction in CGT allowance.

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I am working on the basis that CGT will be equalised with income tax rates. Further the threshold will be either reduced or scrapped, depending on income levels.

Pension contribution deductibility will be reduced

Not thinking they will scrap ISA wrapper.

Doubt they will push for a wealth tax as would alienate core Tory voters.

I don’t think they will touch corporation tax as they want to encourage foreign companies to come to Singapore on the Thames, as well as dealing with brexit Fup. Further it will stifle job creation and a recovery.

Either way I am expecting the worst, but further don’t see the point at this stage of the economic cycle. I think the US continues to act better. As they did with the Financial Crisis.

Rates are zero. Fix the economy and the inflate your bet away later.

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Let’s see.

I am afraid that they might propose changes later in the year, not necessarily now on 2-3 March 2021. Now on 2-3 March they might come and say ok, no changes (pandemic still ongoing). But what they could do instead is that they could come and propose changes later like June/July.

After a google search I found this

They raised CGT rates on June 2010 from 18% to 28%. So they did this LATER in the FY. They could as well do the same now. Come on 2-3 March and say we are OK (pandemic), then fuck us later in the year (after all vaccinations have been applied successfully and lockdown is over)

If they touch/srapp the ISA wrapper, they will be the biggest clowns in history

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I am HOPING you are right. This CGT allowance is the most important thing for me

It is for all these reasons that I have been pushing for a Bitcoin ETF or other instrument to be able to be bought within an ISA.

In USA they have those IRA’s and they can buy bitcoin within those…

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I was living in the US at this time so missed this, but very interesting to note. Thank you.

I had been working on the assumption that something would be announced in March for following year and that was the end of it.

I have already started making plans for next financial year based on what I see as possible.

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Do I have the full text? It’s behind a paywall

I seriously doubt they’d cut it to 2000 and/or raise the cgt to 40%+. That would instantly make Britain one of the highest capital taxing countries in the world/Europe. This would imho drive more qualified foreign workers (me) and jobs out of the country than Brexit ever could :smiley:

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Exactly, lets not forget that despite the pandemic spending, this is one of the most pro-rich governments ever, so I wouldnt expect any more than a very minor reduction in allowances or increases in taxes.

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Here’s the important part:

The OTS also thinks the CGT allowance could be reduced to catch out more taxpayers. It said that the number of people paying the tax would double to 552,000 if the threshold went down to £5,000, and triple if it was £1,000. It suggested a range of £2,000 to £4,000 would raise £14 billion a year.

It seems unlikely that the chancellor would do anything to harm business growth, so a full-on raid on capital gains may be out of the question.

However, he could target gains made on the sale of second homes, for example, to rake in more tax from those who have done well out of the property market, adding to the additional stamp duty they pay when buying property.

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Not just foreign workers, I was born & bred in London and I can assure you I’d be right behind you.

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I don’t agree. Workers are here because UK is an international country with a range of highly paid skilled jobs. They are not here for CGT allowances.

Further the government would say that between an ISA and Pensions there are adequate tax wrappers for long term savings. How many people can max their isa and pension allowances every year.

What are the equivalent of an ISA in European states? Then there is EIS SEIS VCT allowances etc. There are many ways to shield gains from UK taxation.

If someone relocate it will be because of work opportunities or quality of life considerations. Many of the good jobs are only available in London and not other parts of Europe.

This is changing but due to brexit and regulations. It won’t be from increasing CGT.

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The question to ask is why those jobs are in the UK, and a large part of the answer is the business-friendly environment which we’ve fostered. One component of that environment is competitive taxation levels which don’t drive out investment or wealth.

The best way to deal with the massive debt incurred by the pandemic is to cut regulation, cut taxes, promote growth, and inflate it away (and hopefully run a smarter economy going forward that isn’t based on neverending deficit spending – something the Tories promised but never fulfilled from 2010).

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I fully agree.

However because I am greek, and judging from the greek government and what they’ve done since Greece went into crisis in 2010, I expect everything.

Hope for the best though because I am optimistic

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Tell that to the greek government where since 2010 they have slaughtered the base salary and they stole the pensions to combat austerity

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Greece’s main issue is the Euro, the government sold away their sovereignty over monetary policy and now they have no means by which to control or affect inflation. Devaluation is a really powerful tool in financial crisis because it allows you to create a strong export economy. If there’s one thing I will praise Tony Blair for – and there really aren’t many – it’s keeping us out of the single currency.

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