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Review tees up Capital Gains Tax raid

Buy-to-let investors and those with assets outside tax wrappers heavily affected
Review tees up Capital Gains Tax raid
  • A review of Capital Gains Tax (CGT), commissioned by the chancellor, has urged for a much stricter approach
  • CGT could be more closely aligned with income tax
  • Such suggestions, if enacted, could have a significant impact on investors

The Office of Tax Simplification (OTS) has thrown its weight behind the idea of much more punitive tax treatment for capital gains, arguing that the current system is “counter-intuitive” and creates odd incentives as well as opportunities for avoidance.

The OTS argued that the annual allowance for the tax, which currently stands at £12,300, should be slashed, with Capital Gains Tax (CGT) rates being aligned with income tax. Basic rate taxpayers would currently pay CGT at the rate of 10 per cent, with this rising to 20 per cent for higher and additional rate taxpayers. Capital gains are currently treated much more leniently than income, both in terms of the annual allowance and rates applied (see table below).

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