George Osborne’s budget is handing a tax cut averaging £3,000 to some of the wealthiest people in the country who make up just 0.3% of the population, the shadow chancellor, John McDonnell, has said.
Labour is calling for the cut in capital gains tax (CGT) to be scrapped, saying it would give investors already making money about the same, on average, as the government had planned to take from disabled people under changes to benefits.
Osborne made the surprise announcement of a cut in capital gains tax (CGT) – from 28% to 20% for higher rate taxpayers and 18% to 10% for those on the basic rate – in the budget as a way to encourage people to invest in shares. The tax is applied on profits on the sale of assets that exceed £11,100 and is paid by a very small minority of people.The present and future tax treatment of capital investment seems to me to be incredibly generous. Not only will you be permitted to make capital gains in any year of up to £11,100 without liability for tax, but you will also be able to receive up to £5,000 in dividends before paying tax. In order for the taxman to get anywhere near your capital investment pockets, I estimate that you would have to have investments of well over £100,000. Not exactly poverty-stricken, then.