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

neverdespairgirl

Harry_Powell wrote: »

Not all young people are feral monsters from sink estates, some of us are educated, like.

We don' need no educashun

neverdespairgirl

kennyboy66 wrote: »

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

That was indeed mad beyond belief.

Generali

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!

It seems a weird time to increase tax on wealth creation, just at the time when the UK needs some wealth creation to employ all those people losing their jobs!

Generali

neverdespairgirl wrote: »

It was 40% before, wasn't it?

It was 40% but you got taper relief, that is the rate you paid fell the longer you held the asset.

Also, the price you were assumed to have paid for the asset was index linked so rose with inflation. That index linking is now gone so the increase in the value of an asset due to inflation is now taxable.

kennyboy66_2

Generali wrote: »

It seems a weird time to increase tax on wealth creation, just at the time when the UK needs some wealth creation to employ all those people losing their jobs!

The current Capital Gains Tax rules do little to encourage long term wealth creation and job creation. It collects relatively little tax (£5.3bn in 2007/08 and I assume less last year).

The taper relief system and then the 18% system, could have almost been designed by someone who wished to turn income (taxable at 40%) to capital gain taxable at an effective 10% (under taper relief) then 18%.

99.9% of business in the UK are SME's and employ 14 million people.

By definition these business employ less than 250 people and Turnover less than £23bn. Probably 95% or more of these would never pay capital gains tax at a rate above 10% (due to the entrepeneurs £1million relief).

It would make much more sense to go back to the pre 1998 rules, where gains were charged at top marginal rate, but there was indexation relief.

(Unless of course you think Gordon Brown favours business investment more than Thatcher or Major)

Harry_Powell

neverdespairgirl wrote: »

It was 40% before, wasn't it?

I've never understood why capital gains tax isn't similar to income tax. It benefits people who invest over labour - Marx would turn in his grave (-:

Ditto with other forms of taxation on profits. Why are dividends on shares treated so favourably? The government could get rid of a lot of tax loopholes if they had the same taxation rate for all forms of income.

I know that the inland revenue service is creaking under the weight of the complex tax rules labour brought in, especially tax credits. Surely it'd be a good time for the next government to simplify it all and streamline the revenue. I saw somewhere that the tax rules when printed in book form were taller than a 6ft bloke! How much does that cost to administer?

purch

The government could get rid of a lot of tax loopholes if they had the same taxation rate for all forms of income

Heresy :eek:

Harry_Powell

purch wrote: »

Heresy :eek:

LOL, the only dividends I receive are within my SIPP and so are tax free. One rule for me....

HammersFan

This all presumes labour will be in power to implement such a change. The fariest captial gains system would be one that was tiered according to overall income meaning those who can afford it the most pay the most.

Having said that I do have a bit of a problem with the concept of the tax man taking CG Tax when the money used to acquire the asset was taxed in the first place.

Still, I'd be more than happy paying £1million tax per year (in my dreams) at 40%.

Pennywise

Harry_Powell wrote: »

Ditto with other forms of taxation on profits. Why are dividends on shares treated so favourably? The government could get rid of a lot of tax loopholes if they had the same taxation rate for all forms of income.

That's what I've been saying for years.

Gordon Brown messed up badly when he changed the dividend tax rules. Before his changes, a company had to pay 25% tax on the dividends it paid, and the recipient could reclaim that same 25% if they weren't liable to tax. How simple is that - tax is paid and maybe some can be reclaimed. Then he came along with his ridiculous notional tax credit of 10% that companies don't pay and recipients can't reclaim. At the time, he had just brought in a lower 10% tax rate for companies and individuals so he clearly expected to keep and extend the lower 10% tax rate, but his spending was so high that instead of extending the 10% bands, he had to scrap them, leaving the 10% tax credit on dividends looking stupid and barely understandable to most people.

We'd be a lot better if the last 10 or so years were simply obliterated from the tax books and get back to the position he started off with. He's done nothing but faff around bringing in new rules that people told the govt wouldn't work but he ignored them and did it anyway, only to have to do u-turns later.

I'd say we need to completely abolish national insurance - it doesn't do what he says on the tin anymore - it just gets lost amongst other taxes and bares no resemblance to the costs of healthcare and pensions anymore. Getting rid of it would also get rid of the tax planning to turn NI-able income into non NIable income, such as paying dividends (no ni) instead of salary, turning income into capital gains, etc. Of course, basic rate tax would have to rise to compensate for the loss of NIC, but that so much more income would become taxable at the new rate that it certainly wouldn't have to rise by the current rate of NIC - possibly just to say 25%. As for employers NIC, just scrap it as well and increase corporation tax rates to compensate. At a stroke, a major simplification. Of course, there will be winners and losers but at the moment, why should anyone receive money that is taxed at 20% but not pay national insurance at all, i.e. on pensions, rental income, dividends, overseas income etc - it just doesn't make sense. For fairness to the poor, you'd have to increase personal allowances so that the lowest paid and state pensioners weren't penalised, but that can be factored into the equation. At the moment, it is quite possible for someone to go through life without paying any NICs yet benefitting from state benefits, healthcare, state pensions, etc - that's just plain wrong and illogical, so increase income tax and scrap NICs so that everyone with taxable income pays a bit more towards state benefits they enjoy.