In contrast, the government accepted five recommendations made by the OTS in its second report on CGT — which covered much more narrow, technical issues…reports Asian Lite News.
The government has shelved proposals to raise capital gains tax rates to align them with income tax and slash the levy’s annual allowance, moves that would have hit the wealthy.
In the past year, the Office of Tax Simplification (OTS), a statutory body, has published two reports into CGT at the behest of chancellor Rishi Sunak and concluded that the government should consider reforming it.
But on Tuesday, in a letter to the OTS, the Treasury passed over the suggestions made by the group in its first report on CGT, which included the proposal to consider raising the rates and lowering the allowance — signalling that the recommendations are unlikely to be implemented any time soon.
“These reforms would involve a number of wider policy trade-offs and so careful thought must be given to the impact that they would have on taxpayers, as well as any additional administrative burden on HMRC,” wrote Lucy Frazer, financial secretary to the Treasury, referring to the tax authority. “The government will continue to keep the tax system under constant review to ensure it is simple and efficient.”
The first £12,300 of capital gains each year is exempt from tax. CGT is charged at 10 per cent for basic rate taxpayers and 20 per cent for higher and additional rate taxpayers, or 18 per cent and 28 per cent respectively on residential property. In contrast, income tax is charged at a basic rate of 20 per cent, rising to 40 per cent and 45 per cent for higher and additional taxpayers, Financial Times reported.
In contrast, the government accepted five recommendations made by the OTS in its second report on CGT — which covered much more narrow, technical issues. These included an agreement to extend the time divorcing and separating couples have to transfer assets between them without paying the levy. Married couples and civil partners can transfer assets without any CGT being liable, but people getting divorced can only do so up until the end of the tax year in which they separated.
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