Debate Magazine

"Record Capital Gains Means £8.8bn Tax Bill"

Posted on the 02 August 2019 by Markwadsworth @Mark_Wadsworth

From Your Money:
Figures from HMRC show that in 2017-18 chargeable gains for CGT were £57.9bn, an increase of 13 per cent on the previous year, while CGT liabilities were £8.8bn, up 14 per cent on the year before.
The number of CGT taxpayers increased by 3 per cent to 281,000 but most CGT revenues came from a relatively small number of taxpayers. Nearly two-thirds (62 per cent) of CGT came from those who made gains of £1m or more – this group generally represents around 3 per cent of CGT taxpayers each year.
The HMRC figures suggested that people paying CGT are most likely to be aged 55 to 64, followed by those aged 65 to 74.

Fascinating.
1. Your first thought would be, why is the annual exempt amount only £12,000? They could hike it to £100,000 at least with barely a dent in overall receipts.
The reason why not is because CGT isn't actually intended to raise much revenue and certainly not to tax capital (or capital gains). That £8.8 billion is barely one percent of HMRC total tax receipts.
CGT was introduced to discourage people from dressing up income as capital gains (which were not taxable until 1965 in the UK). There's still some incentive to do so, as CGT rates are half as high as income tax rates, but this way, people are forced to report their capital gains on their tax returns, enabling HMRC to have a closer look.
2. The fact that about 8,000 individuals paid two-thirds of CGT suggests that a tiny number of people own two-thirds of the wealth (excl. the largest asset class of all, people's main residences, which is probably not quite so unequally distributed).


Back to Featured Articles on Logo Paperblog

Magazine