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Treasury ready to move on CGT

The Treasury will propose measures soon to address the damage that its capital gains tax changes would do to the life industry, Money Marketing understands.

The Government is thought to have taken on board concerns expressed across the life industry since the CGT changes were announced in the pre-Budget report in October.

Industry sources who have spoken to the Treasury suggest that the Government will move in a “matter of weeks rather than months” to allay industry fears and come up with a workable solution.

A recent Lehman Brothers report suggested that the changes to CGT could wipe up to 10 per cent off the value of life companies, with insurance bonds becoming less attractive compared with other investments such as Oeics or unit trusts.

The Association of British Insurers again met with the Treasury last week, with director general Stephen Haddrill meeting Treasury Economic Secretary Kitty Ussher to convey industry concerns.

ABI spokesman Jon French says: “The Treasury is very much in listening mode and we await further feedback regarding our concerns. The sooner that this issue can be resolved the better.”

A Treasury spokesman says: “Treasury officials have met with representatives of the insurance industry and have had constructive discussions with them.”

Cicero Consulting director Iain Anderson says: “This issue is of the highest priority for the industry and the Government.”

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