Panic selling away from investments that attract capital gains tax underway, survey shows

News - Tax

Written by Ray Clancy

Friday, 21 May 2010 10:30

Independent financial advisers are already advising investors to money out of investments that attract capital gains tax ahead of an expected tax rise in the emergency UK Budget.

Some say that investors are panic selling investments in shares and property as they don’t want to take a hit of 40% that is expected to be announced by George Osborne in his first budget on June 22.

It has been branded ‘a bad policy’ and ‘a tax on envy’. The chief executive of Rolls-Royce revealed that he has sold a third of his personal shareholding in the company for £2.4 million. But experts warn that it is also affecting investors with much smaller investment portfolios.

Property investors are also looking to take gains in the coming months. ‘Wealthy landlords who face a big 40 or 50% hit will want to get out of those buy to let investments as soon as they can sell,’ said Nigel Lewis, a property analyst at property website FindaProperty.com.

Meanwhile a survey of 204 IFAs by financial technology firm 1st-The Exchange has found that 60 % are advising clients away from assets attracting CGT.

The survey also suggests advisers are confident the Government will make headway into reducing the country’s mountain of debt, with 79% thinking Cameron’s coalition will successfully tackle the budget deficit.

When asked what the Government's top financial priority should be, over half of those polled are calling on the Government to change current tax regulations so non and basic rate tax payers can reclaim the 10% tax credit on UK dividends held in pensions and ISAs.

A further quarter of IFAs think caps on higher rate pension tax relief should be reversed in the emergency budget, while 22% say introducing a marriage tax allowance should be the Government’s priority.

‘IFAs are optimistic the new Government’s emergency Budget will introduce the right measures, but they do have a clear wish list and are calling on the Government to focus on specific areas,’ said Paul Yates, development director at 1st-The Exchange.

‘June 22 is an important date for the industry, and we can already see that certain announcements are affecting IFAs’ advice to their clients,’ he added.