Predicting what the government will do in the next Budget is nigh on impossible but one thing is certain: the government has spent an eye-watering amount of money over the pandemic and it must be paid back somehow.
Currently we are in a very low capital tax environment and capital taxes are unlikely to go any lower. Furthermore, even before the pandemic hit, the Government had been reviewing capital taxation (both capital gains tax (CGT) and inheritance tax (IHT)) and had been looking at the amount of revenue raised.
The question then becomes can you take advantage of the current low-tax environment before tax rates (as is widely expected) increase?
For example: If your long-term plans are to leave your second home to your children, have you explored the implications of doing this during your lifetime by gift rather than leaving the property via your Will? Or perhaps, if you are considering retiring from your business, what are the effects of bringing that forward (perhaps with a Management Buy Out rather than with an arm’s length sale at some point in the future)?
Accelerating a disposal can have effects beyond taking a smaller tax charge now over a larger predicted one later, however. Making a gift of an asset but continuing to enjoy using it needs to be structured carefully to avoid anti-avoidance rules. If you are gifting an asset, do you have the cash available to settle any CGT due?  If you dispose of an income-producing asset, how will it affect your longer-term income requirements. Is the recipient of the gift financially stable enough to receive the asset (for example, you should probably think carefully before gifting your son a property if his marriage is in trouble)?  Can your plans benefit from the use of a Trust or Settlement (in the case of a son’s unstable marriage, possibly yes).
Taking professional advice and reviewing your plans could save tax. Even if the downsides outweigh the predicted benefits, at least you will have made an educated decision from the facts rather than always wondering whether you could have done something giving you piece of mind. And how much is that worth?
