Advisers have voiced their support for Conservative backbencher John Redwood’s proposals for a capital gains tax regime tapered to encourage long-term investments.
The Government has proposed significantly raising CGT in line with levels of income tax but Work and Pensions Secretary Iain Duncan Smith hinted over the weekend that the Government is listening to industry concerns.
The Government also appears to have ruled out lowering the annual CGT exemption limit from its current level of £10,100. The LibDems were pushing for this to be reduced significantly.
Speaking on the BBC’s Andrew Marr show on Sunday, Duncan Smith said: “None of the levels have been decided. The Chancellor has been clear that he is listening to everything and he will make final decisions. He has also talked about major exemptions for all sorts of different groups.”
Last week, Redwood (pictured) led a revolt over the plans to increase CGT and wrote an open letter to Treasury exchequer secretary David Gauke outlining his strong opposition to the CGT rise. He suggested one-year gains be taxed at the top level of income tax, tapering down to 0 per cent for assets held over five years.
Informed Choice managing director Martin Bamford says: “The Government needs to reward people that hold on to investments for longer.
Taper relief is the fairest and simplest way of doing this but the Government needs to look at the timescale. I think they should reward those who hold on to investments for even longer than five years, with incentives to invest for 10 or 15 years.”
Baronworth Investment Services director Colin Jackson adds: “People who save for the medium to long term should be offered concessions to do so but people simply wanting to make a quick buck should have to pay the top rate of tax.”