ICAEW calls for more thought on CGT reforms

Posted by AccountingWEB PM | on Wed, 24/10/2007 - 13:20 3523 3 comments

The Institute of Chartered Accountants in England & Wales (ICAEW) has put forward its recommendations to help reduce the impact of the proposed changes to capital gains tax. Acknowledging that there are both winners and losers as a result of the reforms, the ICAEW says that it would like to see steps put in place to help businesses as well as encouraging enterprise.

In his Pre-Budget Report (PBR), the Chancellor proposed a major CGT reform; for disposals of assets on or after 6 April 2008, CGT will be charged at a flat rate of 18%.

Continued...

Business CGT

KenKLM | Sat, 27/10/2007 - 14:19 | Permalink

A few years ago the then chancellor was encouraging incorporation . He has now realised that on incorporation a sole trader can legitimately value their goodwill ; apply the business rules and transfer this value into the limited company to be able to draw back as director's loan thereby creating a tax free / NI free drawing on the business avoiding substantial PAYE . The new measure is surely as much to prevent this "loophole" as 18% CGT will now be chargeable on the sole trader in these circumstances . Was this one of the real reasons for the measure I wonder ?

I have also called for reform of this proposal

richard.murphy | Sat, 27/10/2007 - 20:13 | Permalink

I was challenged by the TUC to consider how the CGT prpoposals could be reformed.

My solution is simple, radical, and yet embraces the position of many of those who have expressed concern but have yet to offer alternative solutions.

It can be read at http://www.taxresearch.org.uk/Blog/2007/10/21/capital-gains-tax-after-the-pre-budget-report/

Richard Murphy

Richard

Anonymous | Mon, 29/10/2007 - 12:19 | Permalink

In passing, the Chancellor could have "cured" part of the private equity problem using the Employment Related Securities rules in ITEPA.