CGT and Dividend Income Allowances Slashed

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17th Nov '22 by doug2500

11 comments 800 reads

I don't think slashed is too dramatic a word for today's announcement.

From next year CGT allowance goes to £6000 then down to £3000 the following year.

Dividends go down to £1000 then £500.

These allowances have been a great help in the movement of holdings to an ISA, which is going to be much more difficult now.

Mind you.....a) It could've been much worse (and may still get worse) and b) While we may moan about tax on inflationary gains not 'proper' gains etc. Nobody's going to have much sympathy for us investors.

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Doug2500

Premium Member

11 comments

Paul2148

18th Nov '22

The drop in dividend allowance will hit those in work share schemes as not held in ISAs. Lots of working people in these at places like Tescos, Royal Mail etc. that I suspect are unlikely to hit the current £2k allowance but could hit new allowances.

rmillaree

18th Nov '22

To be fair to the current peeps in charge for the last 30 years + we have pretty much been borrowing from future taxpayers to score political points for the “now” - obviously that couldn’t go on forever and even with these vey unpopular changes we are still pretty much stealing from todays youngsters to afford our holidays flash cars and nice houses - at least this budget is a clear attempt to move things in the right direction morally speaking. perhaps one can argue now may not be the best time perhaps to implement such changes but practically speaking ensuring one income source is taxed like another ain’t that unfair - its proper first world problems if one ain’t happy about paying some tax on an income source.

Metatron

18th Nov '22

Hitting dividends is a mistake.Given ISAs investors cannot really complain about reducing the C.G.T. allowance however why should C.G.T not be applied to property sales.The only reason not appears to the cynical that 65% of voters own a property however given that the Tories are odds on not to be the govt after the next election this was an opportunity for the govt to do unpopular policies that are in the national interest.Cynically though suspect the Sunak crowd are looking more at policy as platforms for building their post govt careers in fancy jobs in the United Nations,Large Corporations, etc following Nick Clegg,David Milliband. etc.

How else does one explain the irrational policy of not allowing fracking in the UK whilst importing fracked gas in LNG tankers across the Atlantic from the USA?

Watch where ex tory energy ministers land jobs after their govt minister job prospects are over

doug2500

18th Nov '22

How else does one explain the irrational policy of not allowing fracking in the UK whilst importing fracked gas in LNG tankers across the Atlantic from the USA?

My guess is they chickened out of a fight with an extremely vocal minority, knowing importing from abroad will largely go under the radar even though as you say it's irrational (and probably worse) Ditto coal mine. Until demand moderates all they're doing is offshoring economic activity and adding transport costs and emissions.

doug2500

18th Nov '22

One other point I'd make is that if the allowances are disappearing I'd hope they will allow costs to be allowed e.g. sub to Stocko, Platform fees etc. These can be considerable.

epo001

19th Nov '22

Little scare about selling my house until a cup of tea restored cognitive function. The CGT reduction increases the amount subject to tax, so will pay an extra 18% on 6.3K not an extra 6.3K.

Blissgull

20th Nov '22

I wonder if this could present an opportunity for the spread betting companies?

illiswilgig

20th Nov '22

'How else does one explain the irrational policy of not allowing fracking in the UK whilst importing fracked gas in LNG tankers across the Atlantic from the USA'

Indeed.

But, as is usual with politics, perhaps not all is as it seems? Above all else politics is pragmatic, as shown by the recent 180 degree reversal in economic approach and retreating when a battle seems unwinnable?

On the face of it the extension of the moratorium for on-shore unconventional shale gas extraction by hydraulic fracturing (fracking) seems a big win for the anti-fracking and 'nimby' lobbys?

I looked into this some time ago due to a local proposed exploration well on land ownedby a friend of mine. Under the covers prospects are changing. While the extent of the on-shore resource (the shale beds) is known the view of the extent and richness of the reservoir and then the recoverable fraction of that is maturing - and the figures decrease with each paper and review. All of which makes it less likely that on-shore shale gas can actually be extracted economically in the UK in large enough quantities let along at a profit to make a difference - even if attempts to drill the fields are allowed.

Why continue stimulating more protests and bad publicity in a net zero world if the result looks less and less likely to be worth it? That's a lose-lose?

In the US the shale bed resource is truely vast (like the country). Additionally it lies close to the surface (cheap to drill). Is technically simple to recover (it infamously flows from taps on occasion). It is in largely unpopulated regions (and regions where the population is not against it) and perhaps most importantly the landowners own the mineral rights and directly benefit with little or no (obvious) downsides.

None of that is true in the UK. Most of the shale bed lies off-shore. It's much deeper down (more costly to drill), The geology is much more difficult (more complicated and expensive to recover). The region is highly populated (increasing cost of infrastructure, regulation, disposal of waste etc,etc) and none of the landowners directly benefit let alone the population as the government owns the mineral rights.

I wish that wasn't the case. But it is. There might benefits to the drillers in progressing but its increasingly unlikely that on-shore shale gas will result in large gas flows and any profits anytime soon - when we need it - and the politicians would need it. Politically it's probably clever to get out ahead of this and claim to be doing the right thing environmentally and extending the on-shore moratorium?

But most of the shale gas is off-shore where there is no moratorium, and fracking continues unabated as it has since the 1960's in the North Sea and on-shore. Increasingly looks like a political win-win to take credit for banning on-shore shale-gas whilst quietly pushing off-shore ? Unless they get rumbled of course?

Apologies for long slightly off-topic rambling,

cheers

Mark

illiswilgig

20th Nov '22

A little more on topic.

I think its the same political balance calculation in play. I suspect that there are very few who have made a lot of use of these CGT and dividend allowances as I have been doing in recent years. So not much to be lost by taxing them, whether those affected, as I am, see it as fair or not.

As my nephew said to me recently ' how lovely to have your problem of having savings/investments outside (in excess of) the ISA allowance.'

As I live from the dividends and gains made on my portfolio (when I make gains that is) I've not being paying anything like the level of tax that most people make from their paid employment income. So a little rebalancing of that is small beer for me in the scheme of things and fair enough under the current circumstances for all of us? At least that's what I am telling myself - mainly to avert the natural feelings of outrage at paying more :-)

That's not to say that I agree with everything in this budget, or even the direction of travel, which seems much more of a political calculation than what is best for the future of our society?

cheers

Mark

Snazzytime

20th Nov '22

This appears to be more than cuts to CGT and dividend tax allowances. It appears to be signposting a complete phasing out of both allowances. At their reduced levels of £3000 and £500 they will be of very little benefit.

For those who have any CGT carry forward losses (I happen to have £14k) they may well lose the opportunity to offset these losses in the event that CGT is completely phased out. Something to bear in mind.

Silver Moon

20th Nov '22

Is it a fact that a subscription to Stockopedia is an expense that can be set against an income tax bill? I should like to be enlightened as it won't be long before I will be scraping up funds for next April's new ISA subscription of 20K. Incidentally, isn't it time this amount was raised of does Mr Sunak have other plans regarding ISA's?

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CGT and Dividend Income Allowances Slashed

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Doug2500

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