“After recent stockmarket volatility, capital gains tax (CGT) is a problem many investors must wish they still had,” says Niki Chesworth in The Daily Telegraph.
But most investors are likely to be sitting on profits, and should consider whether to sell now or after 5 April, when the new CGT regime takes effect.
A cut in the CGT rate from a top rate of 40% to 18% is good for property investors, but not for those with “business assets”, including those in share-as-you-earn schemes and Aim stocks, where the rate goes from 10% to 18%. Analysts fear a big sell-off in the run-up to the deadline and the FTSE Aim All-Share index has already fallen 8% since the start of the year.
Leonie Kerswill, of PricewaterhouseCoopers, advises investors to hang on to assets that they think will rise “because the tax savings may be less than potential profits”. One way to avoid the higher CGT rate is to transfer assets into a Sipp (self-invested personal pension) or a discretionary trust. A couple can transfer £600,000 of assets into a discretionary trust (crystallising gains at 10% tax) and this will also benefit heirs, as the assets will “potentially be exempt from inheritance tax”.