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Budget 2021: OTS capital gains tax review


In November 2020 the Office of Tax Simplification (OTS) has published a report reviewing capital gains tax which included the following recommendations:

  • Possible alignment of CGT and IT rates in order to simplify the tax system as the current difference in tax rates incentivises taxpayers to structure their affairs so that their activities and investments generate capital gains rather than income.

  • Potentially taxing some share-based rewards from employment and some retained earnings in smaller companies (on liquidation or sale) at income tax rates.

  • Replacement of Business Asset Disposal Relief (the rejigged version of Entrepreneurs' Relief) with a relief more focused on retirement - the OTS suggests a 25% minimum shareholding and a 10 year holding period.

  • The BCVA's comments on the OTS capital gains tax report can be found here.

All of these recommendations have the potential to generate additional revenue for the Exchequer. It will be interesting to see if the government adopts any of these suggestions in the Budget.


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