As expected, the government is flying a kite to see how much public opposition there is.
They usually get their allies to hint at a large increase so that when they implement a slightly smaller one, people think "that's not too bad."
If opposition from their core of older voters is too great, they drop the idea and say it was never their intention.
The idea this time is to increase Capital Gains Tax rates to bring them into line with income tax, and to reduce the CGT nil band.
I suppose BTL landlords will complain that the good times are over.
"Above an annual exemption of £12,300, CGT is charged on gains at 10 per cent for basic rate taxpayers and 20 per cent for higher and additional rate taxpayers. This rises to 18 per cent and 28 per cent respectively where the gains relate to residential property. Income tax is charged at a basic rate of 20 per cent, rising to 40 per cent and 45 per cent for higher and additional taxpayers.
What did the report say? The OTS found several areas in which CGT was “counter-intuitive, creates odd incentives, or creates opportunities for tax avoidance”. It pointed to employee share schemes and company directors, who are able to recategorise earnings from their work as capital gains and pay tax at lower rates. Aligning income tax and CGT rates would reduce these distortions, the OTS said, as would charging income tax rates on business owner-managers and share remuneration.
The government should also consider bringing in inflationary relief on gains, it said. Describing the current CGT allowance as “relatively high”, the OTS floated a cut to between £2,000 and £4,000. It also urged a reduction in the number of different rates that CGT is charged at from four to two, to make the system simpler and more predictable. On transferring wealth, it recommended scrapping the “capital gains uplift” rule, which allows beneficiaries to inherit an asset at its value on the date of death rather than the time of purchase. This encourages people to transfer business and personal assets on death, rather than during their lifetime, the OTS said. “This may not be best for the business, the individuals or families involved, or the wider economy.”
https://www.ft.com/content/94a364ee-745a-492e-9529-9cf90de38313
They usually get their allies to hint at a large increase so that when they implement a slightly smaller one, people think "that's not too bad."
If opposition from their core of older voters is too great, they drop the idea and say it was never their intention.
The idea this time is to increase Capital Gains Tax rates to bring them into line with income tax, and to reduce the CGT nil band.
I suppose BTL landlords will complain that the good times are over.
"Above an annual exemption of £12,300, CGT is charged on gains at 10 per cent for basic rate taxpayers and 20 per cent for higher and additional rate taxpayers. This rises to 18 per cent and 28 per cent respectively where the gains relate to residential property. Income tax is charged at a basic rate of 20 per cent, rising to 40 per cent and 45 per cent for higher and additional taxpayers.
What did the report say? The OTS found several areas in which CGT was “counter-intuitive, creates odd incentives, or creates opportunities for tax avoidance”. It pointed to employee share schemes and company directors, who are able to recategorise earnings from their work as capital gains and pay tax at lower rates. Aligning income tax and CGT rates would reduce these distortions, the OTS said, as would charging income tax rates on business owner-managers and share remuneration.
The government should also consider bringing in inflationary relief on gains, it said. Describing the current CGT allowance as “relatively high”, the OTS floated a cut to between £2,000 and £4,000. It also urged a reduction in the number of different rates that CGT is charged at from four to two, to make the system simpler and more predictable. On transferring wealth, it recommended scrapping the “capital gains uplift” rule, which allows beneficiaries to inherit an asset at its value on the date of death rather than the time of purchase. This encourages people to transfer business and personal assets on death, rather than during their lifetime, the OTS said. “This may not be best for the business, the individuals or families involved, or the wider economy.”
https://www.ft.com/content/94a364ee-745a-492e-9529-9cf90de38313
