George Osbourne introduced a higher rate of 28% in 2010, before cutting the higher rate to 20% in 2016 and the lower rate to 10%.1 Capital gains tax today CGT is applied to the difference between the price you bought an asset for and the price you sell it for. [...] For example, academics at the Centre for the Analysis of Taxation, Arun Advani and Andy Summers, argue that, for the top 1% of taxpayers, the share of income from capital gains is rising.13 The lower rate of CGT makes the taxation of total remuneration (gains + income) less progressive. [...] However, if the purpose of the acquisition is to renovate the property and then sell it on at a profit, this is a trading transaction, and the profit is assessable to Income Tax. [...] The imposition of CGT means that the present value of that income is being taxed when the stock is sold, and the future income will also be taxed. [...] This increase, which took place when a tax increase was passed for the following years, was evidence of the magnitude of transitory realizations responses and contributed further to concerns about the reflection of transitory responses in the econometric studies.’ In general, the economic literature agrees that there is a major short-term response to an announced tax rise.
Authors
Related Organizations
- Pages
- 16
- Published in
- United Kingdom
Table of Contents
- By Daniel Herring 1
- Capital gains tax in the UK 2
- History 2
- Capital gains tax today 2
- How much does capital gains raise 3
- Capital gains revenue 3
- Source Office for Budget Responsibility Tax by tax spend by spend. Link 3
- Who pays capital gains tax 4
- Total CGT payers and amount paid per taxpayer includes trusts individuals 4
- Source HMRC Capital Gains Tax statistics 1 August 2024 Table 1 Estimated number of taxpayers amounts of gains and tax liabilities by year of disposal. Link 4
- Number of taxpayers and total CGT paid by range of capital gain 2022-23 5
- Source HMRC Capital Gains Tax statistics 1 August 2024 Table 2.1 Estimated number of taxpayers amounts of gains and tax liabilities by size of gain. Link 5
- Number of individual taxpayers and total gains by income 2022-23 6
- Source HMRC Capital Gains Tax statistics 1 August 2024 Table 3 Estimated number of individual taxpayers by size of gain and taxable income. Link 6
- Capital gains tax internationally 6
- Capital gains tax rates with top marginal income tax rate for comparison 7
- Denmark 7
- Chile 7
- Norway 7
- Netherlands 7
- Canada 7
- Finland 7
- France 7
- Ireland 7
- Sweden 7
- United States 7
- Portugal 7
- Spain 7
- Austria 7
- Germany 7
- Italy 7
- Israel 7
- Australia 7
- Iceland 7
- Japan 7
- United Kingdom 7
- Lithuania 7
- Latvia 7
- Estonia 7
- Poland 7
- Greece 7
- Colombia 7
- Costa Rica 7
- Hungary 7
- Mexico 7
- Slovenia 7
- Belgium 7
- Korea 7
- Luxembourg 7
- Switzerland 7
- Turkey 7
- New Zealand 7
- Slovak Republic 7
- Czech Republic 7
- Source Tax Foundation International Tax Competitiveness Index 2024 21 October 2024. Link 7
- How should we tax capital gains 8
- Taxing at the rate of income tax 8
- Arguments against capital gains tax 9
- Double taxation 9
- Explainer How CGT can be double taxation 10
- Locking in assets 11
- Discouraging entrepreneurship 11
- Taxing inflation and the normal return 11
- There is no good reason to raise CGT in the current circumstances 12
- Evidence on revenue 13
- The impact on revenue 13
- CGT revenue as a percentage of GDP with headline rates of CGT 13
- Source OBR Historical public finances database 20 July 2023. Link D. Neidle The history of UK capital gains tax in five charts Tax Policy Associates 10 February 2024. Link 13
- HMRC ready reckoner statistics 15
- Conclusion 16
- Daniel Herring is researcher for economic and fiscal policy at the Centre for Policy Studies. 16
