Specialist Dental Accountants for over 28 years - Call 020 8346 0391
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Specialist Dental Accountants for over 28 years - Call 020 8346 0391 |
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He (Mac) has helped me as my practice has expanded from single-handed to a six surgery/8 dentist practice. |
T67 - ●Capital Gains Tax Regime Change. Different rates of relief for different kinds of investment will be replaced with a single flat tax rate of 18% after April 2008. Currently a relief called taper relief reduces the amount of gain which is chargeable to tax depending on how long the asset has been held before it is sold & whether it is a business asset or a personal one. For personal assets, this may result in some "winners", however, in most cases, people who sell business assets (including goodwill) will lose out. An example will help to illustrate: An asset costing £100,000 is sold 7 years later for £200,000. This results in a gain of £100,000. The individual concerned is a higher rate tax payer with no other gains in the period.
Sold Pre April 2008 – As it has been held for 7 years, it is 75% chargeable meaning £75,000 of the gain is chargeable to capital gains tax. After the annual exemption of £9,200 this means the balance (£65,800) is taxed at 40%. Tax: £26,320 Sold Post April 2008 – No allowance is made for the fact that it has been held 7 years. After the annual exemption, the remaining gain of £90,800 is taxed at 18% Tax: £16,344
Sold Pre April 2008 – As it has been held for 7 years, it is 25% chargeable meaning £25,000 of the gain is chargeable to capital gains tax. After the annual exemption of £9,200 this means the balance (£15,800) is taxed at 40%. Tax: £6,320 Sold Post April 2008 – No allowance is made for the fact that it has been held 7 years. After the annual exemption, the remaining gain of £90,800 is taxed at 18% Tax: £16,344 As the example shows, the new regime is likely to be better for personal assets, but much worse for business assets. (Note: If the asset was purchased before April 1998 and sold before April 2008, there may be some indexation allowance available as well (this is an adjustment to take into account the effect of inflation) There are plans to bring in retirement relief which may help people thinking of selling their business, but this has not yet been announced. |
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We take great pride in our service, and would be delighted to invite you for a free 1 hour, no obligation meeting at our comfortable offices. Simply call us on 020 8346 0391 to arrange a mutually convenient time. This web-site was last updated on 29/07/2008 Specialist Dental Accountants for over 27 years. Copyright © 2003-2008 Mac Kotecha & Company. All rights Reserved. The information on this site is for general guidance only. It is essential to take professional advice on specific issues about their impact on any individual or entity. No liability can be accepted for any errors or omission or for any person acting or refraining from acting on the information provided on this site. We can still help you if you're not a dentist. Please click here
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