In the second of our two-part series on the recent CGT reform recommendations, our M&G colleague Les Cameron, Head of Technical at Prudential, assesses what might be the impact on inheritance tax and business relief.
As we explained in Part One of this two-parter, the Office of Tax Simplification (OTS) – at the behest of Chancellor Rishi Sunak – has undertaken the biggest independent review of capital gains tax in its history. The aim is to see how the CGT regime can be simplified and the rules improved to achieve their intended outcome and avoid distortive behaviour by asset owners.
Two OTS recommendations to garner attention have been the advice to align capital gains tax rates with income tax rates (to deter investors using the currently more favourable CGT regime to supplement income) and to reduce the annual exempt amount.
Here we look at what the review has suggested for inheritance tax (IHT) and business reliefs.