On the journey towards prosperity we will face a number of things which will be a drag on our endeavours. Things that will work against us to slow us down.
Hundreds of years ago the writer of the New Testament book of Hebrews tried to encourage his peers on their journeys through life by writing ‘let us lay aside every weight, and let us run with patience the race that is set before us’. I want to bring to your attention a particular ‘weight’ that we can lay aside with proper planning.
More recently Orville Rogers who died in November 2019 just two weeks short of his 102nd birthday said ‘I’ve had some tough experiences in life … but you must face the challenges that are before you and overcome them. I determined to keep ploughing ahead.’
Orville was an American pilot, military veteran, and competitive runner. In 2018 at age 101, Rogers took part (as he had for many years) in the USA Track & Field Masters Indoor Track and Field Championships and set new records in the 60 metre, 200 metre, 800 metre, 1500 metre events for the 100 plus age group.
Rogers was a former bomber pilot trainer in WWII and then he flew B-36s ‘Peacemaker’ bombers in Korea. Later in life he flew again but this time for the Missionary Aviation Fellowship flying medical relief to help vulnerable people in hard-to-reach places in the world.
In our journey towards prosperity we will find many hindrances, not least our own desire to spend today on things we don’t really need rather than put funds aside so that we can make a difference to our families and others tomorrow. That is an internal hindrance. One of the external hindrances is the way that tax can slow things down. One tax, in particular, Capital Gains Tax, needs dealing with properly.
Capital gains tax on investment gains is currently charged at reasonably low rates – 10% for basic rate tax payers and 20% for higher-rate tax payers. Tax on second homes has been kept higher (18% and 28% respectively). With the new rule that tax on the sale of a second properties has to be accounted for and paid within 30 days it is clear that the Government is taking a penal attitude towards investing in residential property.
However, certainly for investment gains, there are many tools that you can use to reduce your liability to Capital Gains Tax. For most investors, with the tools that are available, this is one ‘weight’ that we can lay aside. Capital Gains Tax effectively becomes a ‘voluntary tax’ paid by those who fail to take appropriate action at the proper time.
If you want to know more there is a short video on my website and links to various aspects of the tax and ways in which its effect can be reduced or removed altogether capital gains tax