With a new Government, a new Chancellor and a new Budget on 30 October, it is clear that tax increases are coming.

We know the Budget will include further details of the proposed changes to the tax regime for non-UK domicile individuals and offshore trusts, the application of VAT to school fees, and increases to the taxation of private equity investments, but it is clear that the new Government will need go further than this in its first Budget since taking office.

With a reported £22bn blackhole in the public finances, and repeated promises from the Chancellor not to raise the headline rates of Income Tax or VAT, speculation abounds that a number of other tax raising changes may be announced, including cuts to the tax relief on pension contributions and changes to reliefs for Inheritance Tax.

The Chancellor has refused to confirm that there will be no changes to Capital Gains Tax (CGT) and increases to the rates to match Income Tax rates (40% or 45%) are possible. Whilst we cannot be sure if and when any changes would take effect, there are a number of scenarios where action before the Budget may be possible, if you wish to ‘bank’ the current rates of CGT.

• Are you considering selling an asset, e.g. shares or property, in the short/medium term? Ensure you complete the sale before the Budget. For listed shares, it is possible to purchase shares in the same company after 30 days.
• Are you considering gifting an asset to family, perhaps for Inheritance Tax planning purposes? Ensure you complete and document the gift before the Budget.
• Have you deferred gains through an Enterprise Investment Scheme (EIS) which may come back into charge? Crystallise the gains before the Budget.
• Do you hold shares in a non-listed company which you are considering selling or passing onto your family? A number of possibilities exist including:
  • Establishing a Family Investment Company (FIC) and transferring the shares to the FIC. Future gains will be subject to Corporation Tax (current rates 19%/25%).
  • Establishing a family trust and transferring the shares to the trust.
  • Selling the shares to an Employee Ownership Trust (EOT). This can be achieved CGT-free.
  • Where the company’s trade will cease, extract value as a capital gain, through a Member’s Voluntary Liquidation (MVL).

A reminder that CGT on residential property must be reported to HMRC within 60 days. CGT on other disposals effected before 30 October must be reported in 2024-25 Self-Assessment tax returns and CGT paid by 31 January 2026.

With only a few weeks until the Budget, some strategies will require careful planning and time to implement. Please contact Katharine Arthur or Trevor D’Sa if you wish to explore any of these opportunities in more detail.