Opportunity to save tax on your property if you sell before April 2008

The Chancellor has recently published his pre-budget report with some fairly significant changes to Capital Gain Tax, points out Andrew Ranson, property partner at Fisher German.

The changes do not take affect until 5 April 2008. As a result, there will be winners and those who loose out, although if the latter act now they will avoid paying the increased tax. Some of the most obvious to lose out will be those who sell property that would have qualified for Business Property Taper Relief. If their property was used by their business and they have owned it for at least two years, under the current regime they would be taxed at 10% (if a higher rate tax payer). After April they will be taxed at 18% and there will be no allowance for inflation (Indexation) for their ownership between 1982 – 1998. Farmers would be a classic example of this type of property owner and in a number of cases that Fisher German have already looked at, the tax will increase by 600-700%!

The potential winners will be property owners that sell a property they have not owned for very long (less than 8 years) and that would only qualify for Personal Asset Taper Relief. They could see their potential tax rate fall from 40% (if a higher rate tax payer) down to 18%.

If property owners are concerned about these changes and want to learn more, please contact Andrew Ranson at Fisher German 01295 271555.