Taxation: Capital Gains Tax

Debate between Lord Lee of Trafford and Lord Bridges of Headley

Tuesday 7th July 2015 Lords Chamber

[Lord Lee of Trafford]

To ask Her Majesty’s Government what is their estimate of how many taxpayers will pay capital gains tax in this financial year, and how much this will contribute to the public purse.

[The Parliamentary Secretary, Cabinet Office (Lord Bridges of Headley) (Con)]

My Lords, the latest published estimate of the number of taxpayers liable to capital gains tax is for 2012-13, when there were 169,000 such taxpayers. CGT receipts amounted to £5.6 billion in 2014-15, the latest year for which figures are available. Forecasts of receipts published by the Office for Budget Responsibility amount to £6.5 billion for 2015-16.

[Lord Lee of Trafford (LD)]

My Lords, in reply to the Oral Question yesterday from the noble Baroness, Lady Wheatcroft, the Minister said:

“The Government are considering what steps are appropriate to make further progress in shifting the culture of equity markets towards long-termism”.—[Official Report, 6/7/15; col. 5.]

May I suggest that one obvious step for a blue budget—or, indeed, a budget of any colour—would be to bring in a differential between short-term and long-term gains, taxing short-term gains at an individual’s top rate but with tapering rates for longer-term gains? Would not this approach, as supported by most genuine investors and the Quoted Companies Alliance, be more equitable, likely to deliver greater revenues for the Exchequer and, above all, in the national interest as well?

[Lord Bridges of Headley]

My Lords, I hear what the noble Lord is saying and I tread with some trepidation here as we are on the eve of the Budget. However, what I will say is that while previous CGT has had a taper or been indexed to favour long-term holdings, such an approach would lead to the reintroduction of significant administrative burdens for many CGT payers. It would bring significant complexity into the tax system and the wider economic impacts would have to be assessed.