Tax reliefs for wealthy under the spotlight

Savers and investors could be slapped with an extra £120billion in tax over five years under a major shake-up of capital gains tax touted by an influential think-tank. Capital gains tax on people’s wealth held in investments and the sale of second homes and buy-to-lets should be hiked to income tax levels, while the annual exempt allowance of £12,000 should be slashed to £1,000, it says. A tax raid on entrepreneurs was also outlined by the Institute for Public Policy Research, which could see those who have built up companies lose their special 10%.  The tax grab could be even greater if combined with a separate idea to scrap the current CGT exemption for people’s main properties – a new homeowner tax recently floated in a report commissioned by Labour.

Under the Just Tax plans published by the Institute for Public Policy Research today, a basic rate income tax payer would face a CGT hike from 10% on investments and 18% on home sales to 20% across the board. Higher or additional-rate taxpayers currently have CGT levied at 20% on their assets and 28% on properties which are not their main home. They would see their CGT rates soar to their income tax levels of 40% and 45% respectively, according to the report.