On 20 May 2021, the Office of Tax Simplification (OTS) published its report Capital Gains Tax Review – Simplifying practical, technical and administrative issues. This is the 2nd report by the OTS on CGT. The 1st report, published by the OTS on 11 November 2020, considered CGT policy design.
In this latest report, the OTS has made 14 recommendations in total for the government to consider. They include:
- whether CGT should be payable upon receipt of cash (such that, for instalment payments, CGT would be payable on each instalment when paid). The OTS acknowledge that thought would need to be given to how the base cost of an asset is ‘allocated’ to instalment payments in such a scenario, and how to deal with changes (for example to a taxpayer’s residence) in between receipt of instalment payments
- the possibility of an irrevocable provision in corporate bond documents, specifying that it is subject to CGT (rather than, as with the current rules, structuring bonds as non-qualifying corporate bonds in order to secure exemption from CGT)
- perceived improvements to the EIS and SEIS tax relief regimes, to include enabling investors to benefit from CGT relief in cases where they have not claimed income tax relief.
The OTS report can be viewed here.