Asset sales loom ahead of likely increase in CGT rate

A FLOOD of asset sales are expected to be pushed through in the coming days and weeks in anticipation of a rise in the capital gains tax rate.

Sources claim that a number of businesses and other assets will be sold as owners fear a sharp hike in CGT in this week's Budget. There has been talk of it being lifted from 18 per cent to 25 per cent or even 40 per cent.

One firm of lawyers said it was aware of a number of deals being put together across the country in anticipation of a rise, either immediately or at the start of the new tax year in April.

Peter Lawson, partner at Burness in Edinburgh, said: "There is a real concern that CGT will be aligned with income tax. If you are thinking of selling you will have to do it soon, and I think there will be a few deals pushed through before Wednesday."

The prospect of a rise in CGT has been mooted for some time as a likely means for the Chancellor to raise revenue.

But there is hope that he will retain entrepreneurs' relief, which was introduced in April 2008 alongside a reform of CGT announced in the earlier pre-budget report that created a single 18 per cent rate.

As a concession to those who had invested in building small firms, the first 1 million of gains that qualify for relief are taxed at a rate of 10 per cent.