Looking at the detail behind the budget, the changes to CGT entrepeneurs look less painful than mainy commentators had expected.
The tax free alowance remains unchanged at £10,100 and the lifetime CGT allowance for entrepreneurs who sell their businesses was increased from £2 million to £5 million. Thereafter higher-rate taxpayers will pay CGT at 28 per cent when they sell assets. Basic rate taxpayers will continue to pay 18 per cent.
See full text below:
Capital gains tax
As set out in the Coalition Agreement, to partly fund the increase to the personal allowance, increase fairness and reduce tax avoidance the Government will reform capital gains tax to align it more closely with income tax rates.
Effective from 23 June 2010, capital gains tax will rise from 18 to 28 per cent for those with total income and taxable gains above the higher rate threshold. [PRESUMABLY £150K?]
This strikes the right balance between fairness and international competitiveness. A substantial part of the revenue from this measure comes from higher income tax receipts as the incentive to convert income into capital gains is reduced.
Basic rate taxpayers will continue to pay an 18 per cent rate on their gains.
The 10 per cent capital gains tax rate for entrepreneurial business activities will be extended from the first £2 million to the first £5 million of qualifying gains made over a lifetime.
The Government confirms that the annual exempt amount for capital gains tax will continue to rise in line with inflation and will remain at £10,100 for 2010-11.