I have to concede that I'm unlikely to hold the position in the near future, but if I were Chancellor, I'd be increasing Capital Gains Tax (CGT) in today's budget. Taxable capital gains always used to just be added on to your income and taxed accordingly - so if you were a higher rate taxpayer, they'd be taxed at 40%. Then, a couple of years ago, in a confused fudge typical of many tax changes over the last few years, CGT was reduced to a flat 18% for everyone. Given that, generally speaking, capital gains are the preserve of the relatively well-off, this largely represented a significant reduction in tax for the wealthier members of society. Why should income tax go up for the better off as they earned more, but not capital gains tax? What was the logical reason for the change?
It made no real sense then, and it doesn't make any more sense now that the coffers are empty and tax needs to be raised somewhere. So the obvious thing to a non-politician would be to put CGT back the way it was, so that next year people will pay it at 0%, 20%, 40%, 60% or 50% depending in their income. Whether the Chancellor will risk the headlines that might follow from effectively doubling a tax for some people remains to be seen, though. We'll find out this afternoon.
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