Capital Gains Tax plans could be watered down by the Government in the face of widespread opposition.
Work and Pensions Secretary Iain Duncan Smith has hinted that the coalition may scale down its plans to significantly raise Capital Gains Tax to as much as 40 or 50 per cent in the emergency Budget on June 22.
Speaking on the BBC’s Andrew Marr show on Sunday, he said no decision has yet been made on CGT rises, following criticism from the public, industry, and backbenchers who say the rise will cripple recovery and affect those who invested in property because banks were offering a poor deal on savings.
He said: “None of the levels have been decided. The Chancellor has been clear that he is listening to everything and he will make final decisions. He has also talked about major exemptions for all sorts of different groups because we do not want this to harm entrepreneurs and we do not want to harm families that are heading towards retirement who have actually saved.
“George has discussed it with me and others and he is definitely looking for ways in which we can take the sting out of some of this.”
The Liberal Democrats pushed for the CGT rise in order to pay for plans to raise the rate at which people start paying income tax to £10,000 over the next five years.
But the announcement last month has caused a wave of criticism with people claiming it will punish those who invested in property for their retirement and could slow down the housing market.
However, Deputy Prime Minister Nick Clegg, who has pushed the proposals, is now thought to be considering an excemption for gains made as a result of inflation, to protect homeowners.
Speaking to the Daily Mail he said: “Clearly a lot of work is being done right now. There are lots and lots of different ways that you can try and deal with the problem.
“It is impossible to start picking off whether you believe in tapering, in whether you believe in indexation - so you don't tax the increase of the value of assets through inflation because you have to couple that with the consideration of what rates you use. All of those things will be considered.”
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