Money News
With romance in the air, advisory firm Killik & Co suggests married couples and civil partners transfer assets to each other this Valentine's Day to maximise their Capital Gains Tax (CGT) exemption and bank any Indexation Allowance before it is scrapped in April. Indeed, better to give to each other than to the Chancellor of the Exchequer.
Alistair Darling's proposal to simplify CGT at a flat rate of 18% is due to come into effect on April 6th - leaving only a matter of weeks to take advantage of the Indexation Allowance.
Draft legislation from HMRC (Her Majesty's Revenue & Customs) highlights that Indexation Allowance, which was available on assets acquired between April 1982 and March 1998, will no longer be available to enhance the cost of assets sold or transferred after April 5th 2008. But, an individual who owned an asset during the above period could transfer ownership on a no gain/no loss basis to their spouse or civil partner before the end of the current tax year and then lock-in any Indexation Allowance.
Malcolm Cuthbert, Managing Director of Financial Planning at Killik & Co comments: "This does seem to be something of an anomaly but it is in the draft legislation and on the Q&A section of the HMRC website, although it could still be withdrawn.
"Nonetheless for any married couple (or civil partners) it is worth reviewing their affairs, especially if one of them has an asset which was bought in the early 80s and is now heavy with gain. If this is transferred to their partner you could be locking in a much higher base cost and therefore potentially saving significant amounts."
13 February 2008 © Moneyextra.com
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