Capital gains tax receipts are set to plummet, experts have warned.
Despite generating £5bn in capital gains tax (CGT) receipts over the 2006/07
financial reporting period, the UK government is poised to receive less from
the tax as the downturn continues, ACCA said.
Chas Roy-Chowdhury, head of taxation at ACCA, said receipts are due to
‘decline steeply’, partly due to the slowdown in the rental and second-property
He also cites a reduction in securities trading as triggering the trend.
‘Capital gains receipts from shares will decrease because there is a fall in
share prices. The market will again push down the level of capital gains tax
which people pay to the taxman.
‘Overall, even if the stock market begins to rally, ACCA suspects there will
be sharp declines in the amount of CGT which goes to the Exchequer over at least
the next year,’ he said.
Roy-Chowdhury also predicts a drop off in income tax receipts derived from
these sources, particularly with the drop in rental income and an increase in
the cost of mortgages on second mortgages.
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