The Chancellor has requested a review of the capital gains regime in relation to individuals, business owners and employers.
On 14 July 2020 the Chancellor sent a letter to the Office of Tax Simplification (OTS) requesting it to ”undertake a review of Capital Gains Tax and the aspects of the taxation of chargeable gains in relation to individuals and smaller businesses”. The Chancellor also thanked the OTS for their “ongoing work in reviewing the tax system and striving to make it simpler, fairer and better”.
Following the Chancellor’s letter, the OTS has published a scoping document. The scope of review includes a wide range of Capital Gains Tax (CGT) related aspects and issues affecting individuals (including investors), partnerships, unincorporated businesses and single entity owner-managed companies.
The OTS has split the call for evidence into two parts. Part one requests high level comments on the principles of CGT and structural considerations, with emphasis on allowances, exemptions and reliefs, treatment of CGT losses and comparison between taxation of chargeable gains and other types of income. The deadline for the response to this part is 10 August 2020.
The second part requires responses by 12 October and looks at various CGT aspects in more detail. The focus of this part is to examine challenges and issues affecting taxpayers, including individual taxpayers, investors, employers and companies. The more detailed queries delve into the interaction of CGT with other taxes such as income tax (including the boundary between income tax and CGT for employees), inheritance tax and stamp duty land tax to identify any distortions and potential for harmonisations across the different taxes. Also included is an assessment of the administrative burden of CGT, including payments, claims, record keeping and valuations amongst other things.
KPMG will be responding to both parts of the OTS call for evidence. If you have any questions or would like to share your views, please speak to your usual KPMG contact.
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