In General

The Emergency Budget is not due to take place until next month but the new Chancellor is already coming under scrutiny for the proposed plans to taxation. A Sunday newspaper quoted various government aides saying that George Osborne was aware of the public concerns regarding the planned rise in capital gains tax.

The new Capital Gains Tax rate will be up to 40%, up from 18%. Investment house, Fidelity’s Tom Stevens commented: ” CGT always looked like an easy target given the discrepancy between the tax rate on earned income and capital gains so it is not surprising that it is first in the politicians’ sights.”

The increased tax rate is likely to have a more severe effect on savers which means there is likely to be an increase in people seeking tax-shelter investments such as ISAs. However, it is still unclear when this rise will come into effect. It could be applied from the date of the Emergency Budget or it may be held off until 6th April 2011. The least popular option, though, is likely to be the retrospective application of this tax rise where it will be effective from 6th April 2010.

The government has confirmed that there will be “generous exemptions for entrepreneurial business activities”. How these exemptions will be applied is likely to be amongst the main focus areas for the government over the next few weeks.

The aides told the Sunday Times: “There are a range of possible options on capital gains tax. It will be important to take the time to get this right.”

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  • pat Wisby
    Reply

    Here is one lifelong entreprenuer heading for the
    exit fast! .
    We are a high tech design and manufacturer exporting 90% of turnover.What the country needs right now.

    Take away R & D relief !
    Increase capital gains on our personal pension portfolios !

    Meddle with entreprenuer allowances!

    And you think we will stay and take it ! then who will create the wealth to pay the countries debt!

  • David
    Reply

    I’m really concerned about this tax hike. I’ve worked hard all my life, saved, and put that saving in to property. The pensions are a mess, it seemed like a safer investment. The banks have stung me with large upfront fees in their thousands already for remortgaging on ‘Buy to Let’, and I’m stuck in high interest fixed rates and bank variable rates. I don’t make money on the rent, the rent is fair, I’m a good landlord. The only possible gain I can make for my entrepeurship and work on this investment is in capital gain. This 40% if imposed immediately will wipe out all profit I made, and effort I’ve put in to this. Nick Clegg is wrong to take from the hardworking people middle ground people who try to invest for the future, and to give to those that chose to not work, or waste all their money rather then save, or don’t bother completing their education. To take immediately feels like somebody stealing direct from my bank account. This is not fair, we should have time to re-structure our investments. This is not fair, we are a capitalist economy not socialist. Investors will be forced to invest abroad, and to try other unpopular ways to claw back this big loss like raise rent perhaps or delay selling…

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