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Call for CGT taper relief wins industry backing

Redwood: CGT should be tapered

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.”


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There are 4 comments at the moment, we would love to hear your opinion too.

  1. Why not
    Taper relief for long term holders at 10% /year down to 10% by year 10 back dated to 5th April 2000.

    Entrepreneurs get 50% relief after 2 years and 10/year down to 10%after 6 years. Same for corporates.

    Keep £10k tax free minimum for all

    All others pay CGT at their Marginal rate for anything over £10k
    No indexation for inflation but annual reviews at budget.

  2. Taper relief, who would have thought ?

    Another brilliant original thought from the Romulan starfleet…..

  3. Christie Malry 3rd June 2010 at 10:56 pm

    Why not bring back both taper relief and indexation? They used to be a pig to calculate when you had to do everything by hand, like in our exams, but these days everything’s calculated on computer anyway.

    As I’ve argued on my blog, CGT without taper relief and without indexation is dead in the water. The government will have to do something on either… or both.

  4. Miles Stapleton 7th June 2010 at 9:31 am

    The basic problem is with the Private Equity people declaring what is really their income as Capital Gains. Therefore changes in the law should be directed at them not us.
    Failing that we could go back to Lawson’s system which is easy enough to calculate in Excel.

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