Coalition government 'leads to tax uncertainties'

13 May 2010



With the Conservative Party announcing it has joined forces with the Liberal Democrats to form a coalition government, many questions remain over what this will mean for taxation. Discussions are already underway in Downing Street to determine which of the parties will have its way when it comes to issues such as Capital Gains Tax (CGT), with some analysts making predictions over what is likely to happen.

It is already understood that the alliance of the two political parties will lead to an increase in CGT for non-business assets. At present, the rate stands at 18 per cent, which the coalition government will increase to 40 per cent, insiders from within the Tory Party have indicated. The City anticipates that this will lead to a surge in the number of investors looking to sell off their non-business assets in favour of investments that will generate them more income.

Revenue generated from this initiative is expected to go towards the government being able to increase the income tax threshold, which formed a major part of the Liberal Democrats' original manifesto. It had pledged to increase the exemption limit to £10,000, although commentators are unconvinced the Tories will back changing it to such a high level.

Other taxation issues that still need to be discussed in depth by the parties include inheritance tax, although it is believed that Tory plans to increase the threshold to £1 million may have been thwarted. The so-called mansion tax had been met with disapproval by many groups, although some believed it would make little difference due to declining property values.

The Private Client team at B P Collins comments: "The new government has promised an emergency budget within it's first 50 days in office and this should address many of the current tax uncertainties. The B P Collins Private Client team is on hand to discuss any particular concerns clients may have and advise on options available to them."

If you require legal advice, for either your private affairs or organisation, please call Buckinghamshire based B P Collins Solicitors on 01753 889995, complete the online enquiry form or email enquiries@bpcollins.co.uk.

Posted by Sara Rendell

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