Chancellor George Osborne says he did not introduce taper relief on capital gains tax as it would have added a layer of unnecessary complexity and would be open to abuse.
In the emergency Budget last month, the Government increased the rate of CGT to 28 per cent for higher rate earners, effective immediately. Savers paying the basic rate of income tax will continue to pay CGT at 18 per cent.
Giving evidence to the Treasury select committee this morning, Osborne said taper relief had been abused in the past.
He said: “I looked at a taper and of course the last-but-one Chancellor introduced a taper and to be frank it was abused. I think from memory around 80 per cent of the tax ended up being paid at the taper because people just rolled forward their gains.
“So although yes of course the policy objective of stopping people shifting their income in the short term is a good one, but when I actually looked at the practicalities of introducing a taper it stuck me as introducing a degree of complexity which was unnecessary and not likely to achieve the policy objective.”