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Capital gains tax changes prompt share and property sales

02 April 2008 / by Joy Tibbs
The changes to capital gains tax (CGT) regulations, which come into effect on April 6, have prompted a flurry of activity.

Shareholders, and business and property owners are looking to avoid paying the higher rates of tax that will be imposed on assets after the deadline.

Chief executive of the London Stock Exchange (LSE), Clara Furse, is among those transferring or selling shares. She sold more than 425,000 LSE shares yesterday, while her husband purchased the exact same number. It is thought this could shave £400,000 off her tax bill.

Former Labour Minister Lord Sainsbury transferred shares worth £340 million earlier this week, while others transferring or selling include Debenhams' chief executive, Rob Templeman and former boss at WM Morrison, Sir Ken Morrison. Lord Sainsbury is likely to save approximately £27 million as a result of his share transfer action.

Many company directors will see rates increase by 80 per cent following chancellor Alistair Darling's decision to scrap taper relief and introduce a single 18 per cent rate across the board. The measures, which Mr Darling claims will simplify the capital gains tax system, have been criticised by many entrepreneurs, business associations and property owners.

On the other hand, a number of buy-to-let landlords have been waiting for the controversial rules introduced in the chancellor's pre-budget report to come into effect before selling their properties.

According to The Financial Times, many investors will take advantage of the new rate, which will fall from the current maximum of 40 per cent to 18 per cent for many. It is anticipated that large numbers will sell up after April 6, especially among those whose properties are unlikely to gain in value in the near future.

And, if there is a major influx of rental property on the market, this could hamper house price growth across the UK, particularly for new build and city centre apartments, The Financial Times said.

©Fair Investment Company Ltd