Taxbriefs Commentary Library

A ‘Foxy’ Budget suggestion

Danby Bloch, 15 Mar 2013


 

It is the pre-Budget silly season, when the Chancellor is inundated with bright ideas from anybody who wants to get coverage in the press – such is still the importance of the Budget in the political and tax calendar. Right-leaning Dr Liam Fox has grabbed some headlines with a left-field suggestion.


“I would like to see capital gains tax [CGT] reduced, if possible to zero, for a defined period – three to five years – before being reintroduced at a more sensible level.


This would create a tax window where businesses that are sitting on assets might be encouraged to sell, investment in capital becomes more attractive and where hundreds of thousands of second homes might come on to the market.”


Dr Fox believes the drop in CGT would lead to 750,000 second homes coming onto the market, boosting construction and stamp duty receipts. He stops short of arguing for the permanent abolition of CGT and favours a taper relief with low tax for longer holds, at far below the current level of 28%."


The odds on George Osborne adopting this idea any time soon are not high, and it is hard to see the Lib Dems getting enthusiastic about it. Those of us with long memories can probably recall Mr Osborne’s predecessor, Nigel Lawson, increasing the CGT rate to the same as income tax with a top charge of 40%. The argument then was that investors should be indifferent as to the difference between income and gains – though with an allowance for inflation. In economics, the questions remain the same; it is the answers that keep changing.


Mind you, there are bound to be some surprises in the Budget – if only to lift the gloom a little.

 

If you want to update your clients with details of Budget 2013  why not give our team a call today on 020 7970 4142.
 

 


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Danby Bloch

Editorial Director, Taxbriefs

Danby Bloch is the editorial director of Taxbriefs, chairman of city-based IFAs, Helm Godfrey and director of Nucleus, an independent wrap provider.

Over a period of more than 40 years, Danby has established himself as one of the industry's leading thinkers and  is a respected author, lecturer and trainer on tax and financial planning.

 

 

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