CGT silence is golden

A WIDELY predicted increase in the rate of capital gains tax (CGT) to around 40 per cent failed to materialise in the latest Budget, to the relief of high earners seeking to mitigate higher income tax.

On 6 April, a new 50 per cent rate of income tax will be introduced for those earning more than 150,000, while personal tax allowances for those earning more than 100,000 will be tapered until they disappear above 112,950. Yet the CGT rate will remain at 18 per cent, maintaining a 32 per cent disparity between the tax on gains from disposals and that on income for high earners.

Richard Slater, head of pensions at PricewaterhouseCoopers LLP in Scotland, said: "The continuing substantial difference between income tax and CGT rates may encourage companies to look beyond HM Revenue & Customs-approved share plans for more aggressive routes through which employees can be rewarded.

"We have already seen a significant increase in the implementation of these strategies."