So, the Chancellor surprised us all recently and increased the rate of capital gains tax (CGT) to 28%, well below the level that many of those in the profession had predicted….and increased the lifetime limit for Entreprenuers relief to £5m.
Surely, all good news….definitely a “win win” scenario?
Maybe….as always however, the devil was tucked away in the detail of the Budget.
CGT could well rise again up to a 40% (or even 50%) rate, possibly as soon as next year.
The Chancellor did confirm in his speech that he was ”….increasing CGT to prevent people from converting income to capital…”; however a 28% rate still creates a significant differential between the two taxes.
Interestingly the Budget Press Release supporting the increased CGT rate confirmed that ‘The chancellor will decide the rates of CGT for 2011/12 in the Budget 2011.’
This would seem an odd statement to make unless of course the 28% rate was merely a “halfway house” designed to bring in short term revenues, whilst allowing the new government to “look over the books” and assess its future long term income requirements.
We all look forward to George’s next Budget!