Newspapers are reporting this evening on news of interest to UK investors: proposals from Office of Tax Simplification that capital gains be taxed at income tax rates (eg 40%/45% rather than 20% for a higher/additional rate taxpayer) and the annual tax free allowance be reduced from £12,300.
“The report suggested that the government consider reducing the £12,300 threshold, possibly to between £2,000 and £4,000.” (Financial Times)
Some of the many criticisms of this change are that CGT is both a tax on increases that are purely due to inflation, and on savings on which income tax has been previously paid. Many assets that investors may wish to hold cannot be contained within ISAs.
Good news if they simplify tax in general - aligning capital gains and income tax makes sense to me. Just need to make sure assets are held in a non taxable wrapper, so good 212 already allow for ISA’s.
this simplification of taxation hits those less well off the most rather than forcing the super wealthy to contribute more. It’s purely a bid for the government to rake in more funds from the general population than they are entitled to, especially when they use what they currently take so poorly.
Because, in general, the super wealthy will be able to pay tax accountants to reduce their tax liability in some other way - the general public do not.
Not just that. Here in Ireland we have a two tiered income system, 20% at 35,300 and the balance at 40%. If you’re a worker earning 50,000, it could take a few years before your employer raises your salary to 60,000. Even with a 10,000 increase, your increase of take home pay is barely noticeable.
High income earners don’t have this problem.
Higher tax rates for high income earners could be introduced for an equal society.
@Dao its a revenue hit, I cannot in good faith assume they are intending to simplify CGT or I don’t even know what is complicated about CGT?
although 45% CGT charge alone is a good enough reason to get tax residence in another country. Anyone that has to pay this rate will handle it so they won’t pay, and they’ll get some pennies more from the average joe who just made some pennies.
I cannot figure out how I would do that since moving abroad is not an option. I guess I should be glad of all those positions in which I am showing losses (like XOM, COP, CVX, PSX especially), as I should be able set those losses against gains if I were to need to raise cash.
I thought the question was how does increasing CGT rates affect less well off people currently paying CGT more than super wealthy currently paying CGT.
I think its funny that everyone has taken all the available benefits during this crisis, watched the system tank and thinks that it won’t have to be paid back, that’s delusional
also interesting how for years people have been demonising the poorest and most venerable saying they’re living large on unemployment benefit and then the second middle classes are affected the gov and everyone says how utterly impossible it is to live on standard welfare…
Unfortunately with so many fraudsters out there it gives those who don’t want to pay taxes for it all the ammunition they need. But yes I agree I rarely drive through the poorest areas and think damn I wish I was on benefits
I also love it when people quote CGT as a hindrance, other countries thrive paying fixed 50% tax across the board why are we an exception? If your paying CGT then your basically earning money for not working so why not pay a little back?
This would be the biggest anti business investment idea to have at this current time, now more than ever British businesses need backing, to take this away would be surely putting us in line for a business recession, not to mention losing a lot of wealthy tax payer abroad to where CGT are lower! It would be a double black eye given what coronavirus had already done to the economy, can’t see this happening any time soon, also I think that the only fair tax system would be one where it’s calculate to the percentage exact depending on total earnings, some people rely on dividends income, if they were to be taxed at 40% on even small amounts of income, it just would not be worth while, sometimes I think these stories appear in the news and media just to affect the markets, just look at how they’ve acted over the virus, day to days it’s good news followed by bad, people just don’t know what to believe anymore!
What do you mean, the EIS promotion is brilliant for small companies, if somewhat oversold/mis-sold to investors on immature companies.
I cant see it taking away backing, if you back a company and it makes you a profit, you just get taxed a little bit more. If you back a company and it makes a loss, you can use those losses to offset other gains. Seems fair to me?
or I don’t even know what is complicated about CGT?