Government has doubled revenues from CGT in four years
- 21% jump in CGT projected for 07/08 even before new regime takes effect
The Government is expected to have doubled the amount of Capital Gains Tax (CGT) it takes in just four years, from £2.3 billion to £4.6 billion, according to figures obtained by Wilkins Kennedy, the Top 30 accountants.
The figures come before the changes to the CGT regime announced in the Pre-Budget report (09/10/07), which will add a further £2 billion to the CGT take by 2010-11.
According to Wilkins Kennedy, the figures make the new capital gains tax regime announced at the budget, which will result in investors in unquoted small companies and lower rate taxpayers paying up to 80% more CGT, and even more aggressive tax raid.
Year CGT take
|
04-05 |
£2.3billion |
|
05-06 |
£3billion |
|
06-07 |
£3.8billion |
|
07-08 |
£4.6billion |
Roger Williams, Partner, Wilkins Kennedy, comments: “The Government is enjoying a CGT bonanza right now, so the proposed changes to the CGT regime, which will hit small investors and lower rate taxpayers hardest and net a further £2 billion in CGT, seem doubly greedy.”
“Any reform which allows the Treasury to snaffle another £2 billion in CGT should be viewed sceptically.”
He adds: “Basic rate taxpayers who have long-term investments that are being cashed in – typically pensioners realising an investment portfolio – could see their effective tax rate rising from 12% or less to 18% - a 50% rise. Shouldn’t the Chancellor be satisfied with a 21% increase in CGT receipts this tax year alone, rather than turning the screw even further on these taxpayers?”
“The abolition of indexation allowance, which was used to counter the effects of inflation when calculating a capital gain, and often reduced the CGT rate taxpayers paid to less than 12%, is a double blow for long term investors.”
Wilkins Kennedy says that the capital losses sustained by investors after the stock market crash of 2000 will have been offset against gains already made, but now the stock market has passed its 2000 peak further gains are subject to CGT once more.
ENDS
Press enquiries:
Roger Williams
Partner
Wilkins Kennedy
Tel: 01784 435561
