Book update

Photo by Mikołaj on Unsplash

I have completed my latest quarterly update on Practical Farming: Poole published electronically by Croner. The main focus of this update is a new chapter on selling ecosystem services and some commentary on the Agriculture and Rural Communities (Scotland) Bill (ARCS) published in September.

In the tax profession we need to quickly come up to speed on ecosystem services. For this reason, I have included some definitions as this can be a confusing area for the accountant or lawyer when talking to the environmental advisers. The subtlety of meaning is important so I have tried to disentangle how the language and how the business structures work. I have been working closely with some of the country’s leading environment lawyers on trying to understand the language, and I hope I have captured their essences. I will be updating this chapter regularly as things change, and especially when the government make announcements following their consultation on the taxation of ecosystem services.

I have also been working closely with a national firm of environmental consultants and satellite data providers in designing a Biodiversity Net Gain product over the last couple of years, and this has led to all sort of interesting opportunities to consider how ecosystem services can fit into land management. More on this later when this becomes public, but I mention it how as I feel it has given me sufficient confidence to enable me to write the chapter on selling ecosystem services and especially the section on Biodiversity Net Gain.

The government commentaries published alongside ARCS demonstrated a strong commitment to Crofting so I have brought Crofting into the book. I find this approach to land use interesting, and I hope it might have an important part in the future of land use in the whole of UK, not just in Scotland. This did mean I had to add some commentary on other Scottish leases and flesh out Scottish land law a bit. I am not an expert in Scottish land law, and the differences between English and Scottish law are subtle. I hope I have struck the right balance.

The Bill also introduces new thinking on farm payments in Scotland with a new framework for how these will work from 2026, when the current holding legislation in Scotland expires.

As always let me know what you think. The book is available here:

Poole on Farming

I have, today, signed a contract for a book ‘Poole on Farming’. To me this is the most interesting and important trade of all, and the nexus between community, wildlife, landscape and food make this critical now as we face disruptive changes to our society from many directions.

The economics of farming and landed estates is changing with the evolution of farm payments, new opportunities for utilising and offsetting Natural Capital and Carbon along with new Biodiversity Net Gain rules in the Environment Act 2021. All of these will be surveyed in detail with thoughts about how these can be applied on landscape level by landowners and farmers working together.

By its nature, farming has a strong community rooted in the soil. It is one of the few trades where people work together across businesses, whether by partnership, contract farming arrangements, shared assets or infrastructure through formal cooperative structures like those provided by the Cooperative and Community Benefit Society Act 2014. I will be giving detailed instruction about all these together with pro-forma documents.

And of course all the special tax and accounting rules which I am sure you expect from me – averaging, herd basis, losses, capital allowances, VAT, and how capital gains tax, inheritance taxes work in the most common transactions with detailed guidance.

There will be thoughts on incorporation with all the advantages and disadvantages that a company can bring. Yes to R & D and land remediation relief, but what about ATED and benefits in kind. And that burning question: should the land go in?

And finally looking at various ways to diversify the use of the land and what impact this has on the business structure.

Get ready for publication in early to mid 2023.

And yes, I did pick up Oliver Rackham’s seminal work for 50p!

No changes to IHT, but some tinkering with CGT admin

Photo by Michal Hlaváč on Unsplash

On 30 November the Treasury responded to the Office for Tax Simplification about ongoing consultations, and has made two significant announcements.

Firstly that there are not going to be any changes to Inheritance Tax (IHT). This means, at least, that we can start planning again with some certainty.

Secondly, as regards capital gains tax (CGT), the government are going to move forward on some administrative changes to capital gains tax, but it looks like substantive changes are shelved for the short to medium term.

The following are going ahead:

  • Integration of reporting and paying CGT
  • Extending reporting deadline for sales of property to 60 days
  • Extending no gain / no loss window on marital separation
  • Extend roll over relief on compulsory purchase
  • Improve guidance

The following are going to continue to be considered:

  • Real time administrative arrangements
  • Technical changes on share pools
  • Private residence nominations
  • Corporate bond documentation requirements
  • Review EIS rules to help application to CGT


Chancellor responds to OTS reports on Inheritance Tax and Capital Gains Tax

Fog starting to clear

A personal perspective by Stephen Poole

This is a photograph I took in Madeira a few years ago watching the sun rise having spent the night strapped to the mountain carefully watching Zino’s Petrels roost. This was a life changing moment for me, but I think we are at such a moment now as regards management of land in the UK.

The following comments relate to England only. Scotland, Wales and Northern Ireland have their own systems. I have also left out considerations relating to Brexit.

For those involved in farming and land management, things are starting to resolve, but we are not fully home yet. I like to think of land management as being a combination of three different disciplines, all of which no one person can be expert at. This means that to succeed in this there must be a team effort between different disciplines. To me the areas are as follows:

  • Looking after land for wildlife and human recreation
  • The economics of ownership of the land, with the necessity to raise enough income to be able to make a living and look after it
  • The impact of various different taxes on the landowner and activities carried on their land

I put myself as expert in the last category, and I dabble in the second category. I fall woefully short however in the first category, and therefore it is always a pleasure to work with knowledgeable ecologists, wildlife experts and historians. So many pleasant hours have been spent talking into the night about the potential chaos that beavers can wreak compared to the proven benefits . . .

I think as a country we are starting to get a better grip on the way to manage land for wildlife and for the environment more generally, and it looks like good progress is being made on Gove’s popular 25 year plan.

The economics of land management

On the economic side, the erosion of the basic payment as set out in the agricultural transition plan last November is a concern. It was very interesting therefore to see the Sustainable Farming Incentive in England stepping in for what was tier 1 under the original ELMS scheme, and what pleased me about this was that specific rates per hectare were given for specific activities. The farmer will not have to start with a plan, but will develop a plan along with DEFRA. I thought this was a very good approach and accordingly I telephoned all my farming clients to tell them to get within the scheme by the deadline of the 11th of April just gone. To me this looked almost like free money for the farmer.

Tier two of ELMS has been renamed to the Local Nature Recovery, and Tier three has been renamed to Landscape Recovery. Everyone advising farmers whether you be accountant, lawyer or land agent should have a good knowledge of the agricultural transition plan published in November 2020.

In addition to all this we have the potential advantage of Biodiversity Net Gain offset payments under section 106 of the Town and Country Planning Act, but soon to be under the Environment Act once it passes through Parliament, probably later this year. I am starting to see deals valued at around about £12,000 per unit of biodiversity, but the sticking point is going to be the need to enter into a 30 year agreement to maintain such biodiversity once the payment is received.

There are many other schemes and sources of money for landowners to tap into including the woodland carbon code and local water authorities. I think the best place to start here is with the local wildlife trusts and local river trusts who will know what the local priorities and incentives are.

Taxation – a few thoughts

The taxation of land has been under some doubt in the last few years, as the taxation of trusts has been under review for a long time, and there has been of uncertainty on corporation tax rates. The government announced in its ‘Command Paper’ of 23 March 2021 that ‘the responses did not indicate a desire for a comprehensive reform of trust tax at this stage. The government will keep the issues raised under review’. Typically mealymouthed but I think this is telling us that trust taxation is not going to change significantly any time soon. Therefore the choices as between personal ownership, trust ownership or sometimes corporate ownership are looking fairly settled.

To me the increase in corporation tax to 25% announced in the budget slightly changes the calculus here. Corporate ownership has been sought for a number of reasons, such as:

  • To enable profits to roll up at that low rate of corporation tax and allowing dividends to be fed out of the company at a lower rate of tax than normal income.
  • To allow research and development tax reliefs to be claimed
  • To access the extra deduction for land remediation relief.
  • The new capital allowances super deduction is looking quite interesting.

The hated Annual Tax on Enveloped Dwellings (ATED) and income tax benefit in kind rules cause problems with having land and buildings in companies, especially residential property with the farmhouse itself always causing questions. I feel that the increase in the corporation tax rate will slightly blunt the edge of the incorporation advantage.

I have always been disinclined to put the actual land and buildings in the company, as once these assets are in it is quite hard to get them back out again without creating tax charges. The goodwill of farming is held to be attached to the land itself which means that if the land is kept outside the company the goodwill is probably also outside the company which means that companies can come and go without too many problems if the land is kept outside. However, one of my nagging doubts has always been that if the goodwill is outside the company what is the company doing for tax purposes? To me therefore neither approach feels quite satisfying.

Another interesting little problem I’m starting to discuss with people is the question of business property relief for inheritance tax on the land. Payments under ELMS for looking after the land might be treated as business payments if they’re going to be received on the results basis. If the management of the land is in a company and the land is outside, the amount of such business property relief on the land value is likely to be decreased.

Trusts to me are a very good way of owning land as they allow the land’s integrity to maintained across generations. Income in a trust is subject to income tax rates, and assets can be transferred between individuals and trusts relatively easily especially where agricultural relief or business relief from IHT is available. I always suggest that trusts themselves just collect tax on behalf of the beneficiaries . Ultimately where trust distribute their income there is usually just one overall incidence of income tax at the rate of the beneficiaries. However if the trust does not distribute all of its income there is a net tax loss in the trust, but many existing trusts will be past their accumulation periods which was 21 years until this was changed in 2009 to become more flexible.

I consider ‘normal’ trusts to be fairly neutral from an IHT point of view, with a 10 year charge at 6% being close to the death rate for a person surviving to the biblically allotted threescore and 10 years – ie 6% * 7 is close to 40%. It will be interesting to see whether any changes are made to this in the future.

Capital gains tax is being reviewed and the interaction between inheritance tax and capital gains tax starting to make more sense. The granting of a tax-free probate value uplift the capital gains tax has been an anomaly for a long time and I think it’s fair for this to go. I looked at this in my article Here we go round the roundabout. We seem to be settling on 40% as being the amount that feels fair for the country to take, in terms of a higher rate of income tax, and inheritance tax or capital gains tax. The capital gains tax rates are always going to be slightly reduced for inflation either by a blanket lower rate such as we have now, or through some sort of indexation allowance.

We are still waiting to see exactly how local nature recovery and landscape recovery schemes will work, and we still don’t know exactly how net gain offset payments will work in practice. Therefore my feeling is that the fog is starting to clear, but the sun has not yet arrived.

I am going to be speaking about these matters for the Chartered Institute of Taxation in June, and am considering the acceptance of a speaker invitation at a university next year. I am therefore going to be keeping on top of this area over the next year or two so watch this space for updates.


A green future: Our 25 year plan to Improve the Environment: 2018

Agricultural transition plan: November 2020

Sustainable Farm Incentive: March 2021

Tax policies and consultations: Spring 2021

OTS Capital Gains Tax Review: Simplifying by design

Otter spotted . . .

The coronavirus pandemic has meant spending more time at home than I had originally planned for. Partly for this reason, one moment I was anticipating came while I was at home, staying safe and getting ready for a quiet new year. This video is from an estate of which I am a trustee, and which I take part in managing.

Until New Year’s Eve we had not seen Otters in the waterways, so this was the first appearance. We think she is a grown female pregnant with kits, so we are very thrilled to we may have a new family of otters. This one has just succeeded in catching a rather large and tasty looking fish.

This is going to be the year when work starts in earnest to bring the lake and rivers up to a good standard, making use of the new ecosystem service payments scheme within Tier 2, or even a Tier 3, under the new Environmental Land Management Scheme.

Otters are protected so we will, of course, be ensuring that all plans fall within all published guidance. It is my view that we protect wildlife best by allowing people to see and understand it. By doing this we build respect and love for the wonderful creatures living with us on this earth so it will be natural that we should find ways to live in harmony together with them.

A lot of value is gained from creating connected spaces for wild animals which means working with landowners for connected spaces. This is where the Tier 2 and Tier 3 schemes can help bring people together with a financial incentive.

I have had some interesting experience over the last year getting involved in a couple of rewilding projects, and especially thinking about how the tax and economics work. It is quite interesting that rewilding under the new schemes with the existing tax rules can give some surprising advantages to the landowner. Not least of these is that the payments for ecosystem services where there is a plan to carry out some actions for wildlife, and especially where those payments are based on results, can be treated as trading payments. Under current this this changes the nature of the land into being an asset that can qualify for business relief for inheritance tax purposes.

As the year progresses I will of course be sharing with you, from time to time, any interesting insights we gain in putting this scheme into place.

Stephen Poole


Government guidance on protection of Otters

Planning ahead of the Budget

Photo by Michał Parzuchowski on Unsplash

Rishi Sunak is planning to give a Budget on 3 March 2021, and it is expected that there will be changes to various taxes including capital taxes included in that. There is some published information to base thoughts on possible changes and it is worth giving this some consideration.

Inheritance Tax

There are two main sources of information to consider here as follows:

  • All-Party Parliamentary Group on Inheritance and Intergenerational Fairness (APPG) which published its report “Reform of inheritance tax” in January 2020
  • The Office of Tax Simplification which published the document “Capital Gains Tax Review: Simplifying by design”

The APPG has been considering in the round what is fair for capital taxation. Its main proposal seems to be to reduce the amount of intergenerational transfer of assets where there is no tax charge. Their suggestion to achieve this is to have an annual exemption for gifts of around about £30,000 and for there to be an immediate tax charge of around 10% on the value of gifts above that.

What is now the nil rate band of £325,000 would be called the ‘death allowance’ and this would only apply on death. The group considered a rate of 40% to be excessive but instead would be looking at a rate of between 10% and 20% on the basis that this would be a low enough rate for the tax to be broadly based without the need for complex reliefs. This would go along with an abolition of agricultural and business reliefs on the grounds that a 10% rate spread over 10 years, i.e. 1% per year could be paid annually out of net income and would be seen to be fair. In any event any relief for trading is likely to be pinned to an 80% test rather than a 50% test as is now the case for inheritance tax.

This leaves open the question as to how trusts would fall into this as there was no death, and the answer would probably be an annual charge which like the 10 year charge we have now would seek to equate the inheritance tax in the trust to that of a human life.

The main residence nil rate band is seen as an unnecessary complication and I would expect this to be abolished in the budget.

Capital Gains Tax

As far as capital gains tax is concerned the suggestion in the APPG report which has resonances in the Simplifying by design report is to take away the probate value uplift on death. The APPG goes further here in that they do link this to IHT relief is that so this would apply in all cases, whereas in Simplified by design the office of tax simplification consider only taking the probate value uplift away where an asset has been exempted from inheritance tax either by way of agricultural or business relief.

There is broad agreement within the profession that the rate of capital gains tax is likely to be increased from the current rates of 10% and 20% in (18% and 28% for residential property) to the rate of income tax which are 20% 40% and 45%. It has always been my view that such rates would be unfair as capital gains include an element of inflation. The Simplifying by design report meets this question by introducing the concept of an inflationary relief, which would take us full circle back to where capital gains taxes were until 2008. The thinking behind having capital gains tax rates around half of income tax rates is to give a broad brush relief for indexation while keeping the walls simple, and this is the reason that many jurisdictions have a lower rate for capital gains tax as compare to income tax.

If a sale of the assets was imminent, I would advise the tax payers to consider entering into some planning, for example a contract for sale that is left uncompleted. However, if a sale is unlikely I would advise against such action as this may just cause more complications.

Income Taxes

Dividends are taxed at the rate of 7.5% in the basic rate rising to 32.5% for higher rate and 38.1% for additional rate taxpayers. This is markedly lower than the rates of income tax on other sources of income (20%, 40% and 45%) as it is intended to reflect the payment of corporation tax in the company. Whilst this may seem fair for listed companies that pay dividends out at arm’s-length, it seems less fair in the context of comparing dividend payments with payments of remuneration which are subject to national insurance contributions.

Two potential changes have been identified, either or both of which Rishi Sunak may wish to pursue – either national insurance might be added to dividends paid from close companies, or the rate of income tax on dividends might be increased to the full rate of income tax.

If the rate of income tax is increased then the deduction in the company for remuneration would be seen to compensate for the lack of national insurance payment on the dividend, so it would seem unfair to introduce both.

I think the likelihood of either of these changes is quite high and therefore I would strongly recommend that if dividends are being contemplated before sixth of April such payments should be made before budget date.


APPG Reform of Inheritance Taxes (via STEP)

Capital gains tax: Simplifying by design

Here we go round the roundabout

Capital gains tax reform

Photo by Christian Chen on Unsplash

Round and round we go. Just as we’ve got used to the new way let’s go back to the old way.

The report published today is on policy design and principles underpinning capital gains tax and sets the stage for second report will be coming out next year we should explore the technical and administrative issues underneath this. The reports have been produced quite quickly which suggests that there is going to be a change on this in the short to medium term.

The report covers only individuals and does not cover trusts or attribution of offshore gains to UK resident individuals nor does it look at the position as regards arrival and departure from the UK. It is therefore fairly narrow in its scope, but arguably seeking to cover most capital gains in reality.

The main recommendations are as follows

  • More closely aligning capital gains tax rates with income tax and addressing boundary issues between capital and income
  • Reduction of the annual exempt amount so it becomes simply an administrative de minimis
  • Back to a formal relief for inflationary gains
  • More flexible use of losses
  • Simplify the large number of capital gains tax rates
  • Looking again at share based rewards arising from employment

Interaction with Inheritance Tax

In addition to the above specific recommendations, the report looks at making the interaction between capital gains tax and inheritance tax more coherent. In particular they discuss the inconsistency whereby on death a business asset can be entitled to a free capital gains tax uplift which is also exempt from inheritance tax.

This widely idea here is that where there is an exemption from Inheritance tax the government would remove the capital gains tax uplift so the beneficiary would receive the asset at original capital gains tax cost. A problem with this is that the original purchase date of many assets is sometimes going to become very historic and records will probably not exist. At the moment on death, the wiping of the slate clean enables capital gains tax to be accurately calculated for the beneficiary.

Back to retirement relief

Interestingly the government seem to have gone full circle on business disposal relief which gives a 10% rate for business assets (which we used to call entrepreneurs relief) and which replaced a retirement based relief 2008. They appear to be going back to the idea of a retirement based relief. Round and round we go . . .


This report shows quite clearly the pressures on income tax and capital gains tax. Capital gains tax is needed to cover gains made on assets but also to prevent income from wealthy people being converted into capital gains and therefore avoiding taxation.

A de minimis is useful for most people who will never have any significant capital gains other than on small amounts of investments and sometimes some chattels. There is a bewildering a way of reliefs in this area and this could all be swept away by having a small day minimus band.


Capital Gains Tax review

Chancellor’s plan for winter

Photo by Rebecca Prest on Unsplash

Support for workers

Furlough is ending on 30 October, and as a partial and we are told more targeted replacement with have a new Job Support Scheme which will be introduced from 1 November. This will apply for ‘viable’ jobs in businesses who are facing lower demand due to coronavirus. The scheme starts on 1 November 2020 and will last for 6 months..

Employers will continue to pay the wages of staff for the hours they work – but for the hours not worked, the government and the employer will each pay one third of their equivalent salary.

In order to support only viable jobs, employees must be working at least 33% of their usual hours. The level of grant will be calculated based on employee’s usual salary, capped at £697.92 per month.

This is a simplistic example based on weekly payments for a 36 hour week at £10 per hour.

Total normal weekly hours3612
Pay per hour£10
Normal weekly360120
Unworked hours24
Employer top up -1/3 of 24880
HMRC top up – 1/3 of 24880
Total gross pay£360£280
Percentage of normal pay78%
Cost per hour work£10£16.67

Taxes, national insurance and pension costs do not seem to be included. If I find out more I will extend the example.

The scheme is designed to work alongside furlough and in particular

  • The Job Support Scheme will be open to businesses across the UK even if they have not previously used the furlough schem.
  • It is designed to sit alongside the Jobs Retention Bonus and could be worth over 60% of average wages of workers who have been furloughed – and are kept on until the start of February 2021. Businesses can benefit from both schemes in order to help protect jobs.

Self employed

In addition, the Government is continuing its support for millions of self-employed individuals by extending the Self Employment Income Support Scheme Grant (SEISS). An initial taxable grant will be provided to those who are currently eligible for SEISS and are continuing to actively trade but face reduced demand due to coronavirus. The initial lump sum will cover three months’ worth of profits for the period from November to the end of January next year. This is worth 20% of average monthly profits, up to a total of £1,875.

An additional second grant, which may be adjusted to respond to changing circumstances, will be available for self-employed individuals to cover the period from February 2021 to the end of April – ensuring our support continues right through to next year. This is in addition to the more than £13 billion of support already provided for over 2.6 million self-employed individuals through the first two stages of the Self Employment Income Support Scheme – one of the most generous in the world.

VAT cut and deferrals

As part of the package, the government also announced it will extend the temporary 5% VAT rate for the tourism and hospitality sectors to the end of March next year.

In addition, up to half a million business who deferred their VAT bills will be given more breathing space through the New Payment Scheme, which gives them the option to pay back in smaller instalments. Rather than paying a lump sum in full at the end March next year, they will be able to make 11 smaller interest-free payments during the 2021-22 financial year.

On top of this, around 11 million self-assessment taxpayers will be able to benefit from a separate additional 12-month extension from HMRC on the “Time to Pay” self-service facility, meaning payments deferred from July 2020, and those due in January 2021, will now not need to be paid until January 2022.

Giving businesses flexibility to pay back loans

The burden will be lifted on more than a million businesses who took out a Bounce Back Loan through a new Pay as You Grow flexible repayment system. This will provide flexibility for firms repaying a Bounce Back Loan.

This includes extending the length of the loan from six years to ten, which will cut monthly repayments by nearly half. Interest-only periods of up to six months and payment holidays will also be available to businesses. These measures will further protect jobs by helping businesses recover from the pandemic.

We also intend to give Coronavirus Business Interruption Loan Scheme lenders the ability to extend the length of loans from a maximum of six years to ten years if it will help businesses to repay the loan.

In addition, the Chancellor also announced he would be extending applications for the government’s coronavirus loan schemes that are helping over a million businesses until the end of November. As a result, more businesses will now be able to benefit from the Coronavirus Business Interruption Loan Scheme, the Coronavirus Large Business Interruption Loan Scheme, the Bounce Back Loan Scheme and the Future Fund. This change aligns all the end dates of these schemes, ensuring that there is further support in place for those firms who need it.


My fundamental problem with this is understanding why an employer would enter into the scheme. It costs them more to employ the person part time than it does to employ someone else full-time as part of the role to carry out that work. I totally except that I might be missing something, or there may be rules introduced in legislation to protect existing workers. We will have to wait and see.

The reduction in the rate of the self-employed income support scheme to 20% seems particularly severe. I am surprised that it’s gone down from 80% via 70% and now straight to 20%.

It is interesting that possibly for the first time ever and economic plan has been published with absolutely no costing at all.

And no, there was really no excuse for another red squirrel picture…

Should we be scared of tax increases?

Photo by Geran de Klerk on Unsplash

Right now squirrels across the country are collecting up nuts getting ready for winter, food that they hope will feed them into next year. We as a country I’ve had a complicated year with Coronavirus and the vast social issues that has created and there are many people now who are receiving help from the government and all of this needs to be paid for. Many of us have some money squirrelled away for many of us that amount might be reducing, And it may be with some concern that we think about what tax rises there might be in store for us.

My aim here is to collect together the announcements that have been made, and some thoughts about what we might be expecting when Rishi Sunak next stands up for his autumn budget, and I will update this as we get closer to the budget. As at the date of writing the budget date has not yet been announced.

Income Tax

It is very unlikely that the rate of income tax will change in the short to medium term. Indeed with the current Labour opposition there is little pressure on the government here.

It is possible that a hypothecated increase in national insurance contributions might be introduced, but this would probably be unpopular and would take money away from the very people who need to be spending it right now.

Corporation Tax

The government have let it be known that corporation taxes might float up to somewhere around 24% almost returning to the rate of 26% at which they stood when the Conservative government came to power. Labour are not currently putting any pressure on corporation tax rates.

It is very possible that corporation taxes will be restructured to take away some of the advantages to small companies of using dividends to reduce national insurance contributions. We have been waiting a long time for such changes, and this may be as simple as applying national insurance to dividends paid to directors of close companies for example.

Business reliefs

There is increasing speculation that that might be tax relief for business investment, and this may involve another yo of the capital allowances yo-yo. The annual investment allowance is currently at £1 million under a temporary measure which expires in December 2020. It might be that this gets prolonged a little bit longer.

Alternatively the Chancellor may look at shareholding beliefs such as extending the Enterprise Investment Scheme or the Seed Enterprise Investment Scheme. Both of these beliefs are aimed at investors who are investing monies into new or relatively new companies. In the situation where we as a country need investment into new companies and investors have cash in their bank accounts it would seem sensible to allow new businesses to bubble up using such a relief. Having said that the seed enterprise investment scheme is already very attractive and a little bit of tweaking to take away some of the complications and bear traps involved in this relief might be more rewarding.

Capital Taxes

There is already a review into capital gains tax which has been referred elsewhere in this page. There is current speculation that the rate of capital gains tax might be increased up to income tax rates, but this might be seen to break with an important underlying philosophy of capital gains tax that it should not tax inflationary gains. It is for this reason that in the history of capital gains tax there have been various mechanisms to relieve the inflationary gains, starting with an indexation allowance moving onto a type of relief and currently a simple rough halving of the rate. To my mind it seems fair that capital gains tax rate is half the rate of income tax if that is seen as a simplified relief for installation of the gains.

Looking more broadly, the reason we have to have a capital gains tax is that if there was not such a tax, wealthy individuals who are able to control cash flows, might arrange that all of their ‘income’ will take the nature of capital and they would thus escape taxes. There is a long history of anti-avoidance legislation targeted at treating such short-term gains as income and it may be that this is a more fertile ground for short-term capital gains. This might lead to a general rule introduced which says there are short-term capital gain, safer assets held for less than two years, might be just added in as income.

Inheritance tax is constantly under review and this might be fairly fertile ground for changes. The rate of inheritance tax at 40% for death transfers or 20% for lifetime transfers is analogous to the rate of income tax at a basic rate (20%) or the higher rate (40%).

With rules to tax non-UK domiciled individuals on UK residential property (even when held by a non UK company) for both inheritance tax and capital gains tax, it is getting more difficult to avoid inheritance taxes on property. It would not be very surprising to see the non-domicile walls swept away completely to put all individuals on an equal footing here. It would then be the case that a non-resident individual might simply be taxed on assets in the UK without the complications that we have now. It is often the complications that allow for cracks through which tax can leak.

Taking away the tax-free probate uplift on property where not subject to inheritance tax would create a nice tax take for the country. It is clearly right and proper that if the value of an asset has been subject to inheritance tax that same value should then be the base cost for a future disposal. If however the asset was exempt in the estate, by reason of nil rate band business property relief or agricultural relief for example, then it seems fair to both future capital gains on the original cost without that probate value uplift.

The idea of an annual wealth tax has been mooted, but I do not see an appetite for this at the moment. To me, a new tax on capital would be politically unacceptable to the Conservative party at this moment in time. However we will need to wait and see…


As we move away from Europe so we will be unshackled from the EU is VAT rules. This gives the Chancellor some scope for adjusting VAT rates or the commodities and services on which VAT is charged.


Photo by Markus Spiske on Unsplash

Businesses are now able to sign up to the Kickstart scheme under which people aged between 16 and 24 who are claiming Universal Credit can receive a six-month work placement.

Under the scheme, the Government will pay 100% of the age-relevant National Minimum Wage, National Insurance and pension contributions for 25 hours a week.

Employers will be able to top up this wage, while the Government will also pay employers £1,500 to set up support and training for people on a Kickstart placement, as well as helping pay for uniforms and other set up costs.

Further information can be found Landmark Kickstart scheme opens.