The Conservative Party believe Labour’s capital gains tax (CGT) policy may have given them a “huge opportunity” to regain votes from the business sector.
Following yesterday’s announcement that four major bodies including the British Chambers of Commerce have called for urgent talks with the Chancellor regarding his CGT reform, the Conservatives are also determined to get the Government to reconsider. The opposition party will certainly vote against the measure.
Investment manager at Hargreaves and Lansdown, Ben Yearsley, Believes: “The consequences of Darling’s smash and grab raid on CGT will probably be far reaching.”
The reform, which will become effective on April 6, 2008, will bring in a single 18 per cent rate for CGT, getting rid of taper relief. Taper relief, which was introduced by Gordon Brown, was welcomed by businesses as it applied a 10 per cent rate for assets that had been held for two years.
And, although the treasury has agreed to listen to concerns on the issue, it is unlikely to backtrack now as the decision has already been made. It argues that the reform makes CGT simpler for those affected to understand.
“Whilst agreeing with the need to simplify the tax, the manner in which he has done it has overtones of rushed thinking,” said Mr Yearsley.
Furthermore, there are new fears that the changes may have a significant impact on life assurance sales, which are currently worth approximately £35 billion a year in the UK. Companies are worried people may now opt for a unit trusts or open-ended investments over investment bonds from life assurance companies.
Find out more about capital gains tax
and life assurance
© Fair Investment Company Ltd