Budget proposals for an increase in Capital Gains Tax will damage business, the British Chambers of Commerce has said this week.
Budget proposals that threaten an increase from the current 18% Capital Gains Tax to a possible 40% or more would give the UK the highest level of Capital Gains Tax in the world. These budget changes are likely to hit entrepreneurs and business, despite government assurances that they would be protected, said the British Chambers in their submission to the Treasury ahead of next week’s budget changes on 22nd June.
Capital Gains Tax applies to gains from sales of assets, including private investments and gains from stocks and shares, and also to gains from sales of second properties and buy to let properties.
The British Chambers of Commerce cast doubt on government’s capacity to distinguish between private and business assets in relation to Capital Gains Tax, and also stated that in a survey of Chamber members, over three-quarters of businesses were concerned about the negative impression that hikes in Capital Gains Tax would send out to potential investors. With a 50% top rate of income tax and a possible 40% rate of Capital Gains Tax, Britain is sending out a message that it is a high-tax country, said British Chambers of Commerce spokesman Sam Turvey.
Britain’s rate of Capital Gains Tax of 18% is already higher than the average rate in other countries of 15%, while countries such as Austria, Belgium Switzerland and Germany have no such tax at all, said the BCC.
In addition to these increases, the budget proposals also include government cuts in the Capital Gains Tax allowances. While the first £10.100 of capital gains is currently tax-free, government budget cuts may reduce this to £2,000 on June 22nd.
Any budget proposals for government cuts in this area are expected to be implemented without delay, rather than being held over until 2011 or later.
