This is an official ShareSoc News Item written by Cliff Weight, ShareSoc Policy Director.
Our response is limited to CGT on shares and OEICS (unit trusts).
Our analysis is that:
- CGT is complex.
- CGT needs to be simplified.
- CGT is unfair to individual investors in shares versus collectives.
- CGT inhibits effective risk management.
We want to make CGT:
- Easier to work out
- Easier to administer
- Easier to collect.
In detail, we have 3 main suggestions:
- Remove the unfairness of public sector and quoted sector employees having to pay higher rates of tax than employees in PE and PE owned companies. PE owners and employees and PE owned employees should not be able to receive remuneration dressed up as capital gains subject to 28% cgt rather than 47% (Income tax highest rate plus NI). Government should remove the loopholes that PE exploit so that their employees and those in PE owned companies pay only 28% tax rather than the 47% highest rate on remuneration.
- Remove the friction that inhibits individual investors selling shares where they have substantial capital gains. Hence, increase the money available for investment in new business opportunities and in particular in companies that will stimulate growth in the UK economy.
- Introduce a Self-Invested Savings Account (SISA), where capital gains are paid when money is withdrawn from the account. When shares are sold and reinvested, no CGT is paid. This will encourage investors to sell shares in some companies and re-invest them in (potential) growth companies that will drive the future success of UK business. SISA will make the calculation of CGT easy. SISA makes the administration of CGCT easy as it will be done by the platform provider.
Our submission today follows on from our July submission on the principles of CGT.