The Treasury has rejected plans proposed by the Office of Tax Simplification (OTS) to reform Capital Gains Tax (CGT), most notably the alignment of CGT rates with income tax.
Following a detailed review of Capital Gains Tax by the OTS, five recommendations have been accepted by the government, which aim to offer practical simplifications for the taxpayer:
- HMRC will integrate different ways of reporting and paying Capital Gains Tax into the Single Customer Account, resulting in a central reporting hub.
- The 30-day deadline for reporting and paying Capital Gains Tax on the disposal of UK residential land and property has been extended to 60 days for disposals on or after 27 October 2021.
- The current “no gain no loss” window on separation or divorce may be extended and the government will consult on the detail over the course of the next year.
- Specific rollover relief rules which apply where land and buildings are acquired under Compulsory Purchase Orders (CPO) will be expanded and the government will consult on the detail in due course.
- HMRC will improve their guidance in specific areas including the UK Property Tax Return, Business Asset Disposal Relief for farmers or others looking to retire over a period of time, and Enterprise Investment Schemes.
The OTS made fourteen recommendations in total; five further recommendations are being considered and will be kept under review. Four recommendations were rejected including adjustments to Private Residence Relief when a homeowner builds a property in their garden.
The government has stressed that the impact of any changes on wider tax policy and administrative burden on HMRC must also be considered.
