The overall public financial cost of Covid-19 in the UK is estimated to be £300 billion and an increase in Capital Gains Tax could be one way the UK government makes up the shortfall, according to local tax experts.
Capital Gains Tax is the tax levied on the profit achieved through selling an asset, rather than from its overall value. Assets subject to the tax include properties, shares and business assets.
Guernsey does not have Capital Gains Tax. However, Grant Thornton Channel Islands expect that many Guernsey residents may own residential property or other chargeable assets in the UK and will be liable to pay the increased rates, should the tax rise in the coming months.
As such, the firm is advising clients to review the structuring and location of their assets.
“We’re expecting Capital Gains Tax to be one of the first to rise in the UK as it looks to balance the books in the wake of the economic impact of Covid," said Tax Director Neil Hoolahan. "We know there are many islanders who hold property or assets, directly or indirectly, in the UK that would be impacted by these changes.
“Capital Gains Tax is at a historic low, making it a logical choice for an increase, and many islanders may be caught by surprise to see their liability rise in the coming months when they dispose of these assets."
Pictured top: Grant Thornton Channel Islands Tax Director Neil Hoolahan.
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