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LibDems unveil tax reform plans

The LibDems are calling for a major reform of the tax system including the scrapping of capital gains tax taper relief and raising the IHT threshold.

They have developed a six-point plan that proposes the abolition of capital gains tax taper relief in response to the current private equity debate and the introduction of capital gains tax for property and other assets that non-domiciles buy and sell in the UK.

The LibDems say the plans aim to protect the middle-class by lifting the threshold on inheritance tax by extending the seven-year rule on gifts.

They also want to close the “loophole” that allows individuals to move their houses offshore and pay only 0.5 per cent stamp duty.

Liberal Democrat Shadow Chancellor Vince Cable says: “There is a growing sense of unfairness in the tax system with millions of people paying increasing amounts of tax. This includes people paying 40 per cent tax on relatively moderate incomes who will also pay inheritance tax at 40 per cent and stamp duty at 3 to 4 per cent, but who are discovering that the super-rich pay none of these things.

“The rich and well-advised exploit loopholes and end up paying 10 per cent tax rather than 40 per cent. Non-domiciles taking advantage of offshore trusts avoid capital gains tax and people avoid stamp duty by registering their house as being owned by a company.

“The current system is creating a corrosive sense of unfairness. The Liberal Democrats have come forward with a series of practical measures to ensure that everybody pays their fair share. This will allow us to offer tax cuts to the less well-off.”

“We recognise the benefits the wealth creators bring, but there has to be a sense of fairness in the tax system. The endless complexity generated by Gordon Brown’s tinkering has created far too many loopholes.”

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