Capital gains changes cause ‘panic’ amongst savers as they attempt to avoid tax hikes | Personal Finance | Finance

0

The news of the cuts has “spooked” investors and many are turning to financial advisors for help in protecting their finances. The cuts will see the tax-free allowance for capital gains reduce from the current level of £12,300 to £6,000 with a further cut to £3,000 from April 2024. Most people will not need to worry about paying capital gains tax, as it does not apply to a main home or car.

However, it does affect second properties, investments, and other valuable non-essential assets, like expensive wine or antiques.

Financial advisors from across the UK have reported seeing an overwhelming number of clients coming to them in a panic trying to find advice on what they should do.

Speaking to the Telegraph, Felix Milton, a financial adviser in Barnstaple, said that within hours of the Chancellor’s statement, he had clients contacting him to discuss selling their investments and second properties.

Mr Milton noted that the people were indeed “panicked” as they only have six months to act before the new tax rules come in.

READ MORE: Energy suppliers accused of overcharging care homes

He explained how many older Britons have built portfolios which were designed to pay dividends to help income later on but due to the tax changes, the allowance will be shrinking to £500.

Under Mr Hunt’s new rules, the tax-free dividend allowance will reduce to £1,000 in the new tax year, and then down to £500 the year after.

If someone owns shares in a company and receives dividends as a regular income from it, they will likely be affected by this tax measure.

It does also mean some pensioners may have to rethink their retirement plans to avoid being hit by high tax charges.

DON’T MISS: 

The changes have also worried Mr Mtilton’s landlord clients as capital gains tax is charged on profits when a property is sold or gifted.

Under the current rules, higher rate taxpayers pay capital gains tax at a rate of 20 percent, however, it is higher, at 28 percent, on residential property.

Mr Milton added: “One of my clients has three buy-to-let properties but they want to start selling them because they do not want to get hammered by capital gains tax.”

Faye Church, chartered financial planner at Investec Wealth & Investment, warned there will likely be a surge in people selling off their assets over the next few months, ahead of the threshold falling.

READ MORE: No hope for anyone under 40 in Hunt’s budget – more managed decline

Adam Kingswood, of Kingswood Residential Investment Management, told the Telegraph that some landlords had been calling to ask whether they should leave the sector altogether or if the firm could “fast track sales” in order to avoid the extra costs.

He explained: “If they don’t put it on the market right now, they won’t be able to do it by April, especially with Christmas in the middle.

“For a lot of landlords, this will be something that will trigger them to sell. It will be a factor that pushes landlords out of the market.”

The Government stated that the change to the Capital Gains tax allowance will aim to raise £440million in 2027-28 for the HM Treasury.

The proceeds of the dividend allowance change will see the Treasury receive nothing in 2022/23, and a revenue reduction of £30million in 2023-24.

Thereafter, revenue from the policy will aim to rise to £450million in 2024-25, £810million in 2025-26, £860 million in 2026-27, and £940million in 2027-28.

FOLLOW US ON GOOGLE NEWS

 

Read original article here

Denial of responsibility! Samachar Central is an automatic aggregator of the all world’s media. In each content, the hyperlink to the primary source is specified. All trademarks belong to their rightful owners, all materials to their authors. If you are the owner of the content and do not want us to publish your materials, please contact us by email – [email protected]. The content will be deleted within 24 hours.

Leave a comment