Capital Gains Tax up to 40%!

Pennywise wrote: »

What's right to do and what actually happens are two completely different things. When labour scrapped retirement relief and introduced taper relief, a lot of businesses "had to" be sold quickly otherwise their proprietors, who'd been looking forward to relatively low, if any, tax after decades of hard work, would have been landed with huge tax bills threatening their retirement. Same when taper relief was abolished - very little notice and could have badly affected a lot of people despite the reduction in headline rate down to 18%. Luckily, common sense prevailed and they cobbled together entreprenneurs relief to mitigate the damage.

Mt personal view is that regardless of what you invest in (i.e. shares, property, a business, etc)., you should pay at least the same tax as you would if you were earning the money "working". The "workers" are always the first in line for tax increases when times are hard and it's not fair or just.

At the very least, we need to go back the paying CGT at either basic or higher rate percentages according to the amounts. Even better would be a complete change so that capital gains were added to other taxable income and taxed in the same way as wages or other taxable income, i.e. first £10k tax free, then 20% then 40% then 50%. Scrap the annual exemption and regard the newly proposed £10k personal allowance as covering both income tax and CGT. Keep the principal private residence relief. Scrap the lettings relief (there's no logic behind it - you already get relief for years lived in and final 3 years anyway). Then bring in some form of "over time" reduction in the gain to reduce the gain depending on length of ownership - a sort of cross between taper relief and indexation relief. Capital losses should also be freely available to set against other taxable income, so if eg you lost a shed load on shares you could claim some or all of the tax you had deducted from your wages in that year.

I really don't see why there should be any "special cases" at all, whether they be businesses, BTLs, or whatever. If someone has been lucky enough to make a shed load of cash from whatever type of "asset" then paying upto half of the gain as tax isn't unreasonable. My opinion is simply because someone working damned hard is taxed at upto 50% and they're jeopardising their health, family relationships, etc, not to mention reducing time available for recreation. Why should a hard worker pay a higher proportion in tax than someone who's been lucky with their investments?

At the end of the day, if person A makes a million in a year doing one activity, and person B makes a million doing something different, they should be paying the same tax. The idea of risks and rewards of investment decisions should only ever be based on likely direct gains and losses, not on the tax side of things which brings in artificial logic. There shouldn't be the question of doing something differently to pay less tax.

The way I'd like to see it would also have another beneficial side effect of helping towards tax simplification.

dopester wrote: »

Landlords who can offset new boiler, wallpaper, repairs - whatever expenses - including mortgage interest against income... the same should be allowed for homeowners.. being allowed to offset against income tax.

It's a ridiculous advantage in a captive market.

Entertainer wrote: »

Sorry no, they are not equivalent. The point is that capital gains includes a whole lot of investments that are risk investments where you can lose your money, which you can never do with income. (You don't work for a 100 hours and be losing money at the end of it). Look at people who invested in blue chip bank shares- some of them have lost 90% of their money. If you invest in a startup company you can very easily lose all of your money even if on the face of it, the company has a good business plan; they are very high risk investments. Tax any (unlikely) gains punitively at 50% and it is simply not worth bothering with.

You can make philosophical arguments about what is "fair" or not in relation to income but the net result is that you end up with 50% of nothing because the investment doesn't get made. And neither does the creation of new companies and jobs that investment produces, which is immeasurably more than the relatively tiny amounts of revenue CGT produces. In summary- it raises peanuts and it plays havoc with often long term investment decisions.

What was so incredible is that during the 1980's and previous to that when you had a top rate of income tax of 83% or 60%, CGT was at a level of 30% until that clown Lawson changed it and equalised it in 1988.

What we should be focusing on is trying to encourage employment of people and growing the economy and the tax base instead of dreaming up ignorant, punitive ways to tax enterprise.

dopester wrote: »

According to Harry, it's discrimatory that "you can't invest in residential property in a SIPP (though you can invest in commercial property) and you can't claim Entrepreneur's allowance on capital gains for property businesses."

Harry_Powell wrote: »

It's not 'according to Harry' it's according to the law. There are stipulations in both SIPPS and Cap Gains that deliberately exclude the business of residential BTL and therefore by any measure, this is discriminatory. No other forms of business are excluded, hence the rules are discriminatory against residential BTL.

Whether this discrimination is a good thing or not is for you to discuss, but you can't argue the point that there are discriminatory rules in connection with residential BTL.