Rishi Sunak has shelved a proposal to hike Capital Gains Tax (CGT) to help him plug the post-Covid hole in his finances, according to a report on the Independent website.
Its report said that the chancellor had pointed to the “burden” such a proposal would place on tax collectors.
The Office of Tax Simplification (OTS) had recommended changes to CGT to bring it to the same levels as income tax, after being asked by the chancellor to carry out a review of the system.
The OTS had also proposed lowering the annual allowance on the tax – a levy on any profit made when selling an asset – but this suggestion has also been put on ice, according to the Independent.
The online newspaper said that Treasury minister Lucy Frazer had told the OTS: “These reforms would involve a number of wider policy trade-offs and so careful thought must be given to the impact that they would have on taxpayers, as well as any additional administrative burden on HMRC.”
CGT is charged at 10 per cent for basic rate taxpayers and 20 per cent for higher and additional rate taxpayers, with rates of 18 per cent and 28 per cent on residential property.
Income tax is charged at a basic rate of 20 per cent, rising to 40 per cent and 45 per cent for higher and additional taxpayers.
There had been speculation that Mr Sunak would move to address that difference in levels in his Autumn Budget, but the event passed without an announcement.
At the time business was still assessing the impact of the September announcement that National insurance contributions and dividend tax rates will increase by 1.25 per cent from April 2022, with the projected £12bn annual income ringfenced to pay for health and social care.
That followed the chancellor’s March announcement of an increase in Corporation Tax from 2023, with a new rate of 25 per cent. It came with plans to create a ‘Small Profits Rate’, for companies with profits of less than £50,000, which will be kept at the current 19 per cent level.
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