Capital Gains Tax review

Photo by Adeolu Eletu on Unsplash

This is coming at an interesting time: Rishi Sunak has called for a review of capital gains tax. The review will consider Capital Gains Tax and the taxation of chargeable gains in relation to individuals and smaller businesses and develop recommendations for simplification including reducing distortions from both an administrative and technical standpoint.

This will include consideration of general areas such as:

  • the overall scope of the tax and the various rates which can apply
  • the reliefs, exemptions and allowances which can apply, and the treatment of losses
  • the annual exempt amount and its interactions with other reliefs
  • the position of individuals, partnerships and estates in administration
  • the position of unincorporated businesses and stand-alone owner-managed trading or
  • investment companies, including the setting up, selling or winding up of such businesses or
  • companies
  • any distortions to taxpayers’ personal or business investment decisions
  • interactions with other parts of the tax system such as Income Tax, Capital Allowances,
  • Stamp Taxes and Inheritance Tax, including potentially different definitions for similar
  • transactions/events.

This is an area that has changed many times over the years, and it almost feels that each Chancellor wants to carve his or her own identity into the capital gains tax system. Let’s wait to see whether Rishi Sunak can make capital gains tax sit alongside all other taxes comfortably, most especially income tax. We wait with bated breath.

Details are available here

Reference

Capital Gains Tax Simplification Review: Scoping Document

A plan for jobs 2020

8 July 2020

A personal view from Stephen Poole

Photo by dylan nolte on Unsplash

It is fair to say there was a heavy burden of expectation on Rishi Sunak when he stood up today, so it is worth having a calm look at what he has announced, what he hasn’t and to give a little comment.

We have had a week of announcements of spending to support the country out of the covid crisis, with welcome monies earmarked towards museums and galleries and for a green recovery. So now was the time to pull this all together into a coherent scheme.

The announcements

Job Retention Bonus

This will be a one-off payment of £1,000 to UK employers for every furloughed employee who remains continuously employed through to the end of January 2021. Employees must earn above the Lower Earnings Limit (£520 per month) on average between the end of the Coronavirus Job Retention Scheme and the end of January 2021. Payments will be made from February 2021. Further detail about the scheme will be announced by the end of July.

Kickstart Scheme

The government will introduce a new Kickstart Scheme very similar to Gordon Browns Future Jobs Fund from 2008. This £2 billion fund is designed to create hundreds of thousands of high quality 6-month work placements aimed at those aged 16-24 who are on Universal Credit and are deemed to be at risk of long-term unemployment. Funding will be available to cover 100% of the relevant National Minimum Wage for 25 hours a week for each job, plus the associated employer National Insurance contributions and employer minimum automatic enrolment contributions.

It is worth pointing out that the rates of minimum wage for those under 25 are quite low as follows:

Under 18 £4.55
18 to 20£6.45
21 to 24£8.20
Rates applying from 1 April 2020

Traineeships for young people

The government will provide an additional £111 million this year for traineeships in England, to fund high quality work placements and training for 16-24 year olds. This funding is enough to triple participation in traineeships. For the first time ever, the government will fund employers who provide trainees with work experience, at a rate of £1,000 per trainee. The government will improve provision and expand eligibility for traineeships to those with Level 3 qualifications and below, to ensure that more young people have access to high quality training.

Payments for employers who hire new apprentices

The government will introduce a new payment of £2,000 to employers in England for each new apprentice they hire aged under 25, and a £1,500 payment for each new apprentice they hire aged 25 and over, from 1st August 2020 to 31st January 2021. These payments will be in addition to the existing £1,000 payment the government already provides for new 16-18 year-old apprentices, and those aged under 25 with an Education, Health and Care Plan – where that applies.

Eat Out to Help Out

The new Eat Out to Help Out scheme is to encourage people to return to eating out. This will entitle every diner to a 50% discount of up to £10 per head on their meal, at any participating restaurant, café, pub or other eligible food service establishment. The discount can be used unlimited times and will be valid Monday to Wednesday on any eat-in meal (including on non-alcoholic drinks) for the entire month of August 2020 across the UK. Participating establishments will be fully reimbursed for the 50% discount.

VAT – the reduced rate expanded

One advantage of being outside the EU is that we have more freedom to tinker with VAT rates. Mr Sunak has decided to make more use of the 5% reduced rate.

From 15 July 2020 to 12 January 2021, to support businesses and jobs in the hospitality sector, the reduced (5%) rate of VAT will apply to supplies of food and non-alcoholic drinks from restaurants, pubs, bars, cafés and similar premises across the UK. Further guidance on the scope of this relief will be published by HMRC in the coming days.

In addition, from 15 July 2020 to 12 January 2021, to support businesses and jobs, the reduced (5%) rate of VAT will apply to supplies of accommodation and admission to attractions across the UK. Further guidance on the scope of this relief will be published by HMRC in the coming days.

Temporary Stamp Duty Land Tax (SDLT) cut

The government will temporarily increase the Nil Rate Band of Residential SDLT, in England and Northern Ireland, from £125,000 to £500,000. This will apply from 8 July 2020 until 31 March 2021 and cut the tax due for everyone who would have paid SDLT. Nearly nine out of ten people getting on or moving up the property ladder will pay no SDLT at all.

Green Homes Grant

Something dear to my heart, the government will introduce a £2 billion Green Homes Grant, providing at least £2 for every £1 homeowners and landlords spend to make their homes more energy efficient, up to £5,000 per household. For those on the lowest incomes, the scheme will fully fund energy efficiency measures of up to £10,000 per household. In total this could support over 100,000 green jobs and help strengthen a supply chain that will be vital for meeting our target of net zero greenhouse gas emissions by 2050. The scheme aims to upgrade over 600,000 homes across England, saving households hundreds of pounds per year on their energy bills.

My thoughts

A lot of the measures are welcome, especially those aimed at getting young people into jobs. However it feels to me that a lot of the effort here it’s in trying to put the clock back to where it was before Covid has struck rather than trying to reimagine the way the economy works.

Putting money directly into local economies is a good move at this stage so I welcome the efforts to get people eating out and I think it’s a very good move to give grants to people to insulate their homes. This should hopefully get money very quickly into local traders pockets, who will then spend it, taking on apprentices, and supporting the local economy. This is a good way of getting money flowing out to all regions. I did notice before anyone point it out that the eat out to help out scheme applies to food and drinks but, sadly, only to non alcoholic drinks.

As far as the environment is concerned, and farming in particular, I feel that, as long as Brexit can be managed well, in the agriculture bill and environment bill we have enough to work with in re-shaping the future of farming towards a green future. If ELMS (speaking from England) gets off to a good start with serious intent I think the future is very bright for agriculture. We have the tools we need as long as we have the will to use them, and therefore it is leadership that’s going to be needed over the next decade or two.

As a parting shot I notice there is no voucher for haircuts, so I guess my hair will just keep on getting longer . . .