TAX NEWS - JUNE 2010

UK Tax: Cable defends Capital Gains Tax (CGT) bid

03 June 2010 -- The role of entrepreneurs will not be damaged by any changes to capital gains tax (CGT), Business Secretary Vince Cable has assured MPs.

At Commons question time, Mr Cable said the coalition agreement envisaged reform of Capital Gains Tax (CGT) as a means of "making the tax system fairer".

The change would help create revenue to "help lift the tax threshold and lift very large numbers of low-earners out of tax".

But he added: "We are conscious of the impact of Capital Gains Tax (CGT) on business. We want to make it very clear that any reforms will acknowledge the role of entrepreneurship and not damage it."

Mr Cable was replying to Tory Michael Fallon, a member of the Treasury select committee in the last Parliament, amid mounting concern about the impact of any change to Capital Gains Tax (CGT) in the Budget later this month.

Mr Fallon said: "Can you reassure us that any changes to the Capital Gains Tax regime won't reduce investment in business, particularly in new start-up businesses, and won't undermine schemes of employee share ownership."

The Government has said it wants to increase the Capital Gains Tax rate from 18% towards the rates applied to income, which could see Capital Gains Tax rise towards 40% or even 50%.

Critics claim the move could hit investment and jobs and have been piling pressure on Treasury ministers ahead of Chancellor George Osborne's first Budget on June 22.