The top rate of capital gains tax will be cut from 28 per cent to 20 per cent, with the basic rate falling from 18 per cent to 10 per cent, effective in just three weeks time.
Chancellor George Osborne stated the UK’s CGT is one of the highest in the developed world, “when we want our taxes to be among the lowest”.
He explained the old rates will be kept in place for gains on residential property and carried interest.
“I am also introducing a brand new 10 per cent rate on long-term external investment in unlisted companies, up to a separate maximum of £10m of lifetime gains,” he added.
HM Treasury documents confirmed CGT rates will be cut from 6 April 2016 and there will be an additional 8 percentage point surcharge to be paid on residential property and carried interest (the share of profits or gains that is paid to asset managers).
Capital gains tax is a tax on the gain people make when you sell something that has gone up in value.
It is paid at a basic or higher rate depending on the rate of income tax paid.
The government noted CGT on residential property does not apply to a main home, only to additional properties (for example a flat that someone lets out).
The Royal Institution of Chartered Surveyors had called on Mr Osborne to help ‘generation rent’ own their current properties through the reform of CGT ahead of today’s (16 March) Budget announcement.
peter.walker@ft.com
