TaxPersonal TaxCoalition will see CGT hike on the cards

Coalition will see CGT hike on the cards

Conservative-Lib Dem coalition talks thought to have hammered out an agreement on capital gains tax

The new Chancellor of the Exchequer

The pact formed between the Tories and the Liberal Democrats last night to
form a government is believed to have reached a compromise on capital gains tax.

The Liberal Democrats wanted the 18% rate of CGT brought much closer to the
50% top rate of income in efforts to foil tax avoidance and an agreement has
been reached on “non-business assets”.

Specifically, the Lib Dems called for people using second homes as a
speculative investment to pay CGT “at the same rate as on earned income,” not at
the present 18%.

After the two sides reached a deal on this issue reports are circulating of
an agreement to move the income tax threshold closer to £10,000.

The coalition held off from an attack on business assets, which led to calls
for other breaks to be given.

Bill Dodwell, head of Deloitte’s tax policy group hoped staff working for
entrepreneurs would also benefit.

“We hope that the ‘generous exemptions’ for profits related to business will
stretch to include employees,” said Dodwell.

“At present, many employees do not qualify for the current entrepreneurs’
relief – yet their involvement with growing companies is vital.

“Employee tax breaks help to make a big contribution towards getting good
people to take reasonable risks with growing businesses.”

“We also hope that the Government will keep the current level of CGT annual
exemption at £10,100.

“This benefits those on basic rate, as well as people who are further up the
scale. Additionally, it substantially reduces HMRC (and taxpayer)
administration.”

Further reading:

The
Tories’ former manifesto plans

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