Rishi Sunak orders review of capital gains tax after it emerges Chancellor is facing a £322billion budget deficit this year
- Review will examine rules charging up to 28 per cent residential property gains
- It will also look at whether allowances and reliefs could be simplified or scrapped
- Sunak is interested in ‘how gains are taxed compared to other types of income’
A review of the capital gains tax system is under way to see whether it is ‘fit for purpose’.
Chancellor Rishi Sunak has asked the Office of Tax Simplification to carry out the analysis.
Capital gains tax is a levy on any profit made when selling an asset.
The review will examine rules that charge up to 28 per cent on gains from residential property and 20 per cent on other assets.
The Conservative manifesto before the last election promised there would be no rises in income tax, national insurance or VAT. In a letter to the OTS, Mr Sunak said he was particularly interested in ‘how gains are taxed compared to other types of income’
It will also look at whether allowances and reliefs, such as the exemption when selling your main home, could be simplified or scrapped.
In a letter to the OTS, Mr Sunak said he was particularly interested in ‘how gains are taxed compared to other types of income’.
Figures from the Office for Budget Responsibility yesterday showed the Chancellor is facing a £322billion budget deficit this year.
The review comes after the Government left itself with little room for manoeuvre to raise funds from other sources.
The Conservative manifesto before the last election promised there would be no rises in income tax, national insurance or VAT.
But CGT is a modest source of revenue for the Exchequer, sitting well behind income tax, national insurance, VAT and corporation tax, although ahead of inheritance tax.
CGT raised £8.8billion in 2017-18.
A spokesman for Mr Sunak said: ‘Over the last few years the OTS has reviewed nearly all the major taxes, but has not yet reviewed CGT.
‘The Chancellor has now asked the OTS to carry out this review.
‘The OTS has touched on aspects of CGT in some previous reports, but this will be the first time the OTS will have looked more widely at this area.’
The OTS last night launched a consultation that will close in October.