Capital Gains Tax to increase from 18% to 30%?

Harry_Powell

There is increasing speculation that Cap gains will be increased to 30% in the pre-budget speech.

If any resident BTL landlords are thinking of divesting some of their properties, now would be the time to do it!

Graham_Devon

It's all about the yield

Harry_Powell

Graham_Devon wrote: »

It's all about the yield

lol, oh yes, I forgot.

Except when house prices soar and then it's all about the 'canny' investment.

Mr_Mumble

30% would be absurd, you'd get an awful lot of people manipulating capital gains to income very quickly. The reasons for capital gains being treated beneficially is to promote enterprise and risk-taking. Labour have already screwed over long-term investors by getting rid of taper relief and indexation allowance (effectively taxing people for government created inflation!)

Pennywise

Capital gains tax increases are probably the most palatable tax rise for the electorate. I'd never really understood why Gordon Brown reduced them in the first place, but now it looks like yet another tax u-turn for him. (Did he never think anything through?).

Whether it stays a fixed rate is doubtful, though. I'd expect it to be restored to the individual's marginal tax rate, giving them the option to tax gains at up to 50% for the highest earners.

To avoid damaging small business growth, all they need to do is keep entreprenneurs relief, or even better, scrap it and revert back to taper relief (which Gordon introduced and then scrapped!) or go back to retirement relief (which Gordon scrapped!).

Perhaps they should just go back to the CGT regime they inherited a decade ago as none of their changes seem to have helped simplify or make the system fairer. GB has done nothing but tinker with CGT and made it an absolute nightmare for people trying to keep up with the changes, which often had quite dramatic retrospective effect. Capital gains arise over long periods of time and it is quite ridiculous that the tax regime upon initial investment can be so different several years later upon sale.

What a plonker, though, to cut CGT rates at the height when people were selling at artificially high values, thus losing millions to the Treasury on unearned gains and allowing investors to keep more of their already impressive gains, and now values have fallen, to increase the CGT, meaning that a larger proportion of a smaller gain is lost from the investors to the Treasury. Certain economics of the madhouse, but what else can we do to balance the books?

Thrugelmir

Harry_Powell wrote: »

There is increasing speculation that Cap gains will be increased to 30% in the pre-budget speech.

If any resident BTL landlords are thinking of divesting some of their properties, now would be the time to do it!

I've been a consistant advocate on an increase in the rate of CGT on here for a long time. Though the greater danger to BTL is the Irish concept of reducing the offset of interest against rental income to 75%.

A combination of both measures would cause a correction in house prices thats a certainty.

Which pre-budget speech are you referring to?

kennyboy66_2

Mr_Mumble wrote: »

30% would be absurd, you'd get an awful lot of people manipulating capital gains to income very quickly. The reasons for capital gains being treated beneficially is to promote enterprise and risk-taking. Labour have already screwed over long-term investors by getting rid of taper relief and indexation allowance (effectively taxing people for government created inflation!)

Surely some mistake. The biggest beneficiaries of the current Cap gains tax system are higher rate tax payers.
The current tax regime means that venture capitalists convert income which would be taxed at 40% (or higher) to capital gains at 18%

It would be difficult for normal taxpayers to manipulate capital gains to income but still manage to come in at a marginal tax rate of less than 30% even taking into account with the tax free annual allowance.

Taxes going up is rarely something to celebrate, but going up they are, and we are really just talking about the least worst methods of raising tax.

boomerangs

Mr_Mumble wrote: »

30% would be absurd,

Absurd? Capital Gains tax was 40% only a matter of months ago.

kennyboy66_2

Pennywise wrote: »

What a plonker, though, to cut CGT rates at the height when people were selling at artificially high values, thus losing millions to the Treasury on unearned gains and allowing investors to keep more of their already impressive gains, and now values have fallen, to increase the CGT, meaning that a larger proportion of a smaller gain is lost from the investors to the Treasury. Certain economics of the madhouse, but what else can we do to balance the books?

Couldn't agree more. Almost as bad as the cretinous idea that Brown planned to allow residential housing to be put in a SIPP.

tomterm8

I think they should pick a rate and stick with it. This moving it about every two months means you can never know how much tax you will pay on an investment.

kennyboy66_2

Thrugelmir wrote: »

I've been a consistant advocate on an increase in the rate of CGT on here for a long time. Though the greater danger to BTL is the Irish concept of reducing the offset of interest against rental income to 75%.

A combination of both measures would cause a correction in house prices thats a certainty.

This would be interesting. We have had roughly 30 years of private landlords being encouraged by the tax and legal system. A large part of this was necessary, but the balance has tipped too far, so that landlords are competing with 1st time buyers and the houses / flats we have built in the last 10 years have been to meet investor demand rather than housing demand.