Arguments regarding the controversial hike in Capital Gains Tax were being taken ‘carefully into consideration’, said Prime Minister David Cameron yesterday. Indicating a tapered increase, Cameron promised to listen and consider the advice of his fellow Tory backbenchers.
The CGT hike, which was promised in the coalition agreement to raise it in line with income tax, increasing it from 18 per cent to 40-50 percent was drawn up by the Liberal Democrats. However the rise could well prove a long term false economy. After all those who possess healthier finances can afford to defer the sale of capital gains taxable assetts including BTL properties by holding on to them in a bid to dodge paying any additional levy added to the gains tax. The introduction and implementation of the raised levy may see very little increase on the 7.6bn it raised in 2007-2008
Those who purchased a second home or a BTL property as an investment when faith was lost in pension schemes will be punished severely by the hike in tax. What was seen as an investment that was intended to provide an income for old age and retirement will lose it’s shine, leaving many investors who are close to retirement frustrated and demoralised. Cameron and Clegg could well need to make room for a third person at Downing Street as they may need David Blain to perform some magic on this particular problem.
At this moment in time, UK society are aware governmental policy changes are needed and that certain economical sacrifices will have to be met, but they must ensure policies are effective and fair by not penalising the society that they serve for reaching aspirations this country not only encourages but promotes.