Tax Day brings some good news for a change

On 30 November, what has now been titled ‘tax administration day’ the government shared a number of intentions on potential policy reforms this coming year.

Government signals no overt intention to reform capital taxes

In the Treasury’s letter to the Office of Tax Simplification (OTS), the government thanked the OTS for their hard work on various Inheritance Tax (IHT) reports over recent years but concluded that due to COVID-19 and the need to keep a consistent tax take, they were not at this time considering any major changes.

The response goes on to indicate that things will be re-considered in due course but given the government’s commitment to freeze IHT allowances at their current levels until 2025/26, it would seem unlikely to be before this time.

Whilst this is potentially good news for many people – at the same time for those exposed to an IHT liability there is no sign of any further relief on the horizon.

Good news for couples who divorce

The same letter included the governments comments towards the OTS’s Capital Gains Tax reports – with five out of the 15 recommendations accepted (four were rejected entirely and six are being considered further).

The extension of the property filing deadline from 30 days to 60 days was already been introduced at the 2021 autumn Budget.

The acceptance that the valuable ‘no gain, no loss’ inter-spouse treatment should be extended is good news for couples who find themselves dealing with not only the personal, family and financial stresses of a divorce.

Under current rules, spouses can swap or trade assets between themselves free of any CGT but only up until the end of the year of separation.

The response commits to extending this period although is silent on the exact detail, instead preferring to announce the detail later next year.

The OTS were pushing for a window of at least two years post separation or a longer period if in accordance with a court approved settlement.

Taking the sting of capital taxes out of most divorces is a long overdue yet much welcomed change.

For more information on the issues raised in this article or to discuss your individual circumstances, please contact Richard Bull or your usual Crowe contact.