CGT threshold increased for investors and second home owners

PRIVATE investors and second home owners will be able to keep more of their profits after the Chancellor increased the threshold at which capital gains tax is paid.

The CGT threshold is being increased by £400 to £11,700 from the next financial year for people who make capital gains on shares or second homes.

The change will be worth £800 a year to married couples or those in a civil partnership.

Sean Mccann, chartered financial planner at NFU Mutual, said: “This extra allowance is a welcome boost for investors and second property owners as it will allow them to keep more of their money when they realise their gains.

“It will be worth a combined £23,400 for married couples and civil partners, who have the advantage of being able to transfer assets between each other without triggering a capital gains tax charge. Both spouses’ annual exempt amounts can be used in full and potential tax bills can be cut further if one of the couple pays a lower rate of tax.”

The Chancellor also said he was delaying until April 2020 a plan to force CGT to be paid on sales of investments and homes from up to 12 months to less than 30 days.

In other announcements, foreign investors will be forced to pay capital gains tax on the sale of commercial property in the UK for the first time

These changes to “non-resident gains” are expected to pull in £470 million in the five and a half years between now and 2022/23.

Mr Hammond also unveiled plans to raise £2billion in a crackdown on tax avoidance and evasion over the next five years.

Some £155 million was committed by Mr Hammond to spend on new technology and staff for HM Revenue and Customs, which collects tax for the Government.

Mr Hammond told MPS: “We’ve heard a lot of talk from the party opposite recently about what they would do to crack down on tax avoidance and evasion. But the truth is, Mr Deputy Speaker, they didn’t. It is this Government that has clamped down on avoidance and evasion.”

However, the Office for Budgetary Responsibility warned that the sums raised were far from guaranteed. Previous attempts at dealing with tax avoidance and evasion “have not always brought in the expected yield”, it said.

The OBR added: “The measures often target a subset of individuals or companies that are already actively changing their behaviour to avoid or evade tax.

“As a result there is typically a high degree of behavioural uncertainty.”

The OBR also added that “since the measures are directed at uncollected tax, there is usually less reliable data available to inform the costing”, as well as concerns about IT systems.