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Affluent UK Families Act on CGT Fears, Sell Assets and Plan Ahead of 2023 Budget

Proactive affluent families are selling assets and restructuring wealth. They're also considering riskier investments for tax benefits.

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2 min read
As we can see in the image there are houses, trees, current polls, hills and sky.
As we can see in the image there are houses, trees, current polls, hills and sky.

Affluent UK Families Act on CGT Fears, Sell Assets and Plan Ahead of 2023 Budget

Affluent families in the UK are taking proactive measures ahead of the 2023 Budget, selling assets and exploring tax planning strategies to potentially avoid higher capital gains tax (CGT) rates. Fears are rising that the Chancellor might adjust CGT rates or reduce the £3,000 CGT-free allowance.

High-net-worth individuals are employing various strategies to protect their assets. These include asset restructuring, transferring wealth to trusts, and accelerating gifting before potential tax changes. They are also optimizing their use of allowances and reliefs to reduce their tax liability. Some are even considering risky investments like venture capital trusts (VCTs) and enterprise investment schemes (EISs) for favourable tax treatment.

Family investment companies (FICs) are proving popular, allowing parents to gift investments to children while retaining some control. Meanwhile, wealthy clients are contemplating withdrawing the tax-free lump sum from their pensions due to fears of potential cuts to the maximum amount. A simple yet effective tax-efficient estate planning method is making gifts out of surplus income, with no limit and no seven-year clock to worry about. Even families with lower net worths can benefit from starting with basic tax efficiency tools like individual savings accounts (Isas) and pensions.

One beneficial strategy is selling shares with gains under the £3,000 annual tax-free allowance and then buying them back in a stocks and shares Isa. This can be advantageous, even if the rules don't change. Trusts are also being utilised to help families pass on money free of inheritance tax (IHT) with more control and protection.

Affluent families are taking proactive steps to mitigate potential CGT increases. By utilizing various tax planning strategies and basic tax efficiency tools, they aim to protect their assets and minimize their tax liabilities. The coming Budget will reveal the extent of these changes and the impact on high-net-worth individuals.

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