Spring Statement 2019: Private Client
The income tax rates and allowances are now set in the Autumn Budget, so few announcements were expected. Leading into the Spring Statement, the press rehearsed the normal concerns around changes to pensions or the capital gains tax regime, but no mention was made of either. The Chancellor may come back to tinker with these regimes in the Autumn Budget, as both are seen as soft targets if he needs to collect more tax revenue.
CGT private residence relief
A consultation will now be launched on the changes announced at Budget 2018 to lettings relief and the final period exemption, which both reduce the amount of capital gains tax payable.
These changes were already known and are due to come into force in April 2020. This will create a cliff edge in the housing market where anyone is selling a property which had formerly been their main home but later became a property they used to generate rental income. If these changes come in, individuals selling properties after April 2020 may see their capital gains tax liability increase by tens of thousands – so we may see a rush to sell these properties as we approach this cliff edge.
Stamp Taxes on shares consideration rules
A consultation will commence on aligning the consideration rules of Stamp Duty and Stamp Duty Reserve Tax and introducing a general market value rule for transfers between connected persons.
Normal succession planning in a family-owned company would involve shares being given to the younger generations as they take a role in running the business. At the moment, a gift of shares would not attract a charge to Stamp Duty, but the government is considering charging Stamp Duty on a gift of shares in the same way as if the shares were sold for market value.
This may accelerate some families’ planning for succession.