In Focus: Tax Year End  

Capital taxes should be high on govt's reform agenda

Looking at things like entrepreneurs relief, which was scaled back quite considerably a couple of years ago, and renamed business asset disposal relief, that again, can be quite nuanced. It does make me wonder whether it's worth just reviewing the system in full and trying to simplify that.

You'd be surprised how many people don't utilise things like personal allowances, dividend allowances or personal savings; if you can maximise your tax-free allowances, you can actually create quite a meaningful income with no tax on that at all.

FTA: What tax issues have kept you busy?

KA: I deal a lot with the family business space. So looking at individuals that own businesses, and helping them to navigate the tax rules to a succession.

A lot of my clients have been thinking over the past few years about what they what they really want in life, and whether another 10 years slogging in the family business is what they really want, or whether they want to pass that to the kids and enjoy a fun retirement of travelling now that the borders are back open.

So certainly things around looking at passing shareholdings on to family. 

FTA: In the advice space succession planning is a big thing. What should advisers know about?

KA: Depending on the size of portfolio it is certainly worth still considering whether you qualify for business asset disposal relief. Depending on how sales are structured, you can still qualify. So that's a 10 per cent rate on your sale proceeds rather than 20 per cent.

There are a whole raft of qualifying criteria. So as long as you've had the business for at least two years, it depends how the business is structured, whether it's in shares, or whether it's a sole trader business, the rules are slightly different. But that can be reasonably meaningful. So it's the first £1mn worth of gain that you would pay 10 per cent on.

And the other thing that's been quite a difficult conversation to have with people is the tax-free uplift you get on death. So when you pass away, and you've got a qualifying business, like you would have as an adviser, you might pay IHT on it, or you might get relief on it. And what you also get is a tax-free uplift to market value for CGT purposes.

So for a lot of people, they will just hold on to the family business until they die, get relief from IHT, and they can pass that on essentially tax free because the children will inherit with no CGT base cost.