Emergency Budget 2010: CGT increases but not for all
The six-week long debate over the exact nature of the coalition government’s commitment to a hike in capital gains tax is finally over.
The rate has gone up but not for everyone and not by as much as earlier statements suggested, where a match with higher income tax brackets was expected.
As from 23 June, there are two CGT rates on gains made on the sale of assets.
The CGT for low and middle income earners stays at 18 per cent, but for top rate taxpayers (those earning over £40,000) it rises to 28 per cent.
Tapering and indexation had been considered possible options for the Chancellor as he sought to soften the impact of the rise on smaller investors and savers, but he rejected both in order not to overcomplicate the regime.
The annual exemption holds at £10,100, rising by inflation over the years.
The lifetime limit at which entrepreneurs qualify for a reduced charge of 10 per cent on the sales of assets has been extended to £5 million, up from the previous £2 million.