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Daily Insurance Industry News
Thursday 18th of January 2018
December 13, 2007

Revision of CGT changes delayed

by Richard Kilner

Story link: Revision of CGT changes delayed

The Chancellor of the Exchequer, Alistair Darling, has delayed the publication of revised proposals regarding capital gains tax (CGT) until the New Year.

Earlier he had stated his intention to publish them prior to Christmas, but is presently still in the process of considering the various consultations he engaged with following the widespread disapproval of the CGT changes announced in the pre-budget report (PBR).

Under the existing rules, a basic rate taxpayer who has held shares in their employer for two years or more would pay a CGT rate of just 5%. However, the changes announced in the PBR would increase this rate to 18% for any gain that exceeded £9,200, effective from April next year.

The proposed changes have proved very unpopular. It has been pointed out that many individuals who are not flushed with wealth will end up being financially penalised by the plans. However, some of those with more money may see their CGT rate cut (from the highest level of 40%) to the flat 18% rate.

Non-employee stakeholders in a firm would see their tax rate tumble by 22% under the proposals.

It is feared that the Chancellor’s planned changes would see a reduction in shared ownership.

Fiona Downes, Head of Employee Share Ownership at ifs ProShare, has indicated that a substantial minority of employee shareholders will be disadvantaged should the proposals go through.

Downes estimates the numbers involved to be around 272,000.

She has welcomed the review of the CGT changes and the consultations, but added that she hopes the delay will be minimal so that worry and confusion regarding the issue can be swiftly allayed.

 

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