The complex question of CGT

Posted by AccountingWEB PM | on Mon, 31/10/2005 - 09:23 3121 1 comment

By Simon Sweetman

If you browse the websites where people seek answers to their tax questions the first thing that comes to mind (apart from "how did you get in that sort of mess?") is just how many questions there are about aspects of CGT: easily half the total submitted. On a rough complexity to yield ratio it would far outstrip any other tax.

It also offers some idea of how many people try to complete (or not complete) tax returns including CGT without taking professional advice.

Whether they heed the rough and ready advice available from some tax websites we do not know.

Continued...

Editorial?

Paulsoper | Wed, 02/11/2005 - 17:02 | Permalink

What a strange little story to appear out of the blue - is this the editorial opinion of Accountingweb or did the author's name get left off?

Turning to the idea - the most logical reform would be to allow roll-over relief - so that where a growing family needs a larger house they are not penalised, in the same way that a growing business would not be penalised - but its not going make a simpler CGT system - and surely thats the point of the post - How do you make CGT simpler and fairer?

Part of the complexity stems from the revenue refusal to allow genuine simplification - so when we last rebased assets in 1982, instead of just drawing a line and getting rid of the pre '65 nonsense it was retained for fear that 1982 might give some larger losses than original cost.

So lets rebase again - 23 years since the last one means its overdue anyway but just draw a line under the lot - forget 82 values and 65 values and indexation etc etc.

Then allow taper relief to 75% on both business and non-business assets, but let it take 10 years to reach with non-business assets, and apply it to the tax payable not the gain so that taxpayers appreciate that they are paying tax at a reduced rate - the Chancellor talks about CGT being charged at 10% on business assets but we then have to explain to the client why they actually charge 40%.

The Chattel exemption has remained the same since 1965 - lets increase that to (say) £50,000 so the vast majority of private assets will be outside of the scope of the tax.

Keep the main residence exemption but restrict it to the property which is in fact the main residence so doing away with the very useful s222(5) election.

Force the revenue to keep a data base of company share prices so that on a disposal, knowing the date of acquisition they could calculate the gain taking into account share splits, take-overs etc - needing a probate value on three simple holdings recently cost me £15 - why?

CGT could be simpler - and these are simply ideas off-the-cuff - but the greatest barrier to meaningful reform is always the revenue.