Press Release: HB&O tax expert warns of negative effect of CGT rise

A local financial expert has said that the 10 per cent rise in capital gains tax announced by the Government during the budget could damage the economy.The ten per cent rise from 18 to 28 per cent will apply to the sale of assets by the highest earners while those who pay income tax at the basic rate will continue to pay the 18 per cent capital gains tax rate.Andy Farren, tax director at chartered accountants and financial advisors Harrison Beale and Owen which has offices in Coventry and Leamington, said: “It is essentially an optional tax and as such tax revenue will most likely decline as people will simply not dispose of assets.“The previous regime had become fairly straightforward and the rate at which most gains were chargeable was not generally a deterrent for individuals to dispose of assets.“Therefore disposals of assets were carried out for good commercial reasons by individuals and businesses alike. The new rules will cloud the decision making process.”Farren added that the rise seems to unfairly target those who have saved and made provision for the future.“What has to be appreciated is that, apart from a small and wealthy minority who invest in assets for short term gain, the majority of investment in such assets is as an alternative to pension schemes,” he added.“Therefore those investments support business, employment and people who are investing for their retirement and it is unjust that they should be penalised in anyway.”

ENDS

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