In the CIOT’s recent submission to the Treasury Committee’s Inquiry into the 2016 Budget, we said the following:
“Whilst we do not normally comment on rates, the changes to the main rates of CGT were unexpected and not previously announced. Whilst the rate has been reduced for the majority of transactions, we suspect the change has caused confusion or complexity for anyone making recent disposals, particularly between Budget day and 6 April 2016, and that transactions will have been delayed as a result. The intention of the reduction is stated as being to drive productivity growth across the UK, but we question whether a simple reduction in rates will stimulate growth; particularly considering the existing 10% rate of CGT when gains qualify for Entrepreneurs’ Relief.
Maintaining the existing rate of CGT for carried interest, chargeable gains on residential property (where not covered by Principal Private Residence relief), and gains for non-residents, means that there are now four rates of CGT, and complex legislation is required, particularly around the residential property element of the changes. We also suspect that the treatment of capital losses will give rise to added complexity, particularly where the different rates of CGT are in play.”