Lib Dems plan huge hikes in Capital Gains Tax

Lib Dems plan huge hikes in Capital Gains Tax

The Liberal Democrats have proposed an increase in Capital Gains Tax and invited party members to vote on the return of the 50p income tax, says a report in the Financial Times.

The current CGT rate is 28% but the Lib Dems – the party which would like to give us the Mansion Tax – want to see this rise to either 40% or 45% depending on an individual’s income tax rate.  

In addition, the party wants to chop the tax-free capital gains allowance from £10,900 to £2,000.

The paper says the plans have been drawn up by the party’s ‘tax working group’ which includes education minister David Laws, and Chris Saunders who is economic adviser to Nick Clegg.

The implications for the buy-to-let sector would be major. CGT is already the bete noir of landlords. A rise on the scale proposed by the Lib Dems would act as a serious disincentive to landlords coming into the sector or expanding their portfolios.

And just imagine the rush by landlords to sell ahead of the implementation of such a tax rise.

Strangely, in their ‘Decent homes for all’ housing manifesto last year, the Lib Dems talked about “encouraging” the development of the private rented sector.

Meanwhile, in the interests of even-handedness, see the next story for what the Tories might be thinking.