Skandia's Jelley anticipates CGT U-turn by Darling
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Capital gains tax, income tax for high-earners and pension tax relief are likely to be pre-Budget report targets, according to Skandia.
Head of tax and financial planning Colin Jelley says CGT and income tax rates are so misaligned that Chancellor Alistair darling may backtrack on his PBR 2007 move to change CGT to 18 per cent. Jelley believes CGT may be set at a person’s income tax rate or at 30 per cent, midway between basic and higher income tax rates.
He says Darling may simplify the tax regime for annual income over £100,000 and bring in a higher tax rate such as 60 per cent for very high incomes.
He says: “The £1 reduction in the personal allowance for each £2 of income over £100,000 could be removed but the new 50 per cent tax rate introduced at a lower level than the current proposal of £150,000.”
Jelley considers that the pension tax relief threshold for people earning over £150,000 could be red-uced further or everyone could pay a 30 per cent flat rate which would be less reward- ing for higher-rate taxpayers.
He says: “There are areas of our tax system that stick out like a sore thumb and look to be strong candidates for amputation. Advisers need to assess the impact quickly.”
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