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Taxation: Capital Gains Tax

Volume 694: debated on Thursday 26 July 2007

asked Her Majesty's Government:

In the most recent year for which figures are available, what would be the gain to the Exchequer of reducing the generosity of capital gains tax taper relief for business assets so that the proportion of gains chargeable was 75 per cent after one year and 50 per cent after two years or more; and [HL4872]

In the most recent year for which figures are available, what would be the gain to the Exchequer of increasing the length of the capital gains tax taper for business assets from two years to 10 years, as was the case for assets disposed of during 1999–2000; and [HL4873]

In the most recent year for which figures are available, what would be the gain to the Exchequer of increasing the length of the capital gains tax taper for business assets from two years to four years, as was the case for assets disposed of during 2000-01; and [HL4874]

In the most recent year for which figures are available, what would be the gain to the Exchequer of reforming capital gains tax taper relief for business assets so that the proportion of gains chargeable was (a) 90 per cent after one year; (b) 80 per cent after two years; (c) 70 per cent after three years; (d) 60 per cent after four years; and (e) 50 per cent after five years or more. [HL4875]

The estimated yields are calculated on the same receipts basis as the estimates of cost taper relief given in Table A3.1 of the Financial Statement and Budget Report 2007. They do not take into account any behavioural changes which would occur if taper rates were amended. We assume that those behavioural changes would reduce the yields outlined below.

The estimated gain to the Exchequer of reducing the capital gains tax taper relief for business assets so that the proportion of gains chargeable was 75 per cent after one year and 50 per cent after two years is as follows:

Year

Estimated Yield (£m)

2005-06

1,170

2006-07

1,490

The estimated gain to the Exchequer of increasing the length of the capital gains tax taper for business assets from two years to 10 years is as follows:

Year

Estimated Yield (£m)

2005-06

1,320

2006-07

1,400

The estimated gain to the Exchequer of increasing the length of the capital gains tax taper for business assets from two years to four years is as follows:

Year

Estimated Yield (£m)

2005-06

320

2006-07

380

The estimated gain to the Exchequer of reforming capital gains tax taper relief for business assets so that the proportion of gains chargeable was (a) 90 per cent after one year; (b) 80 per cent after two years; (c) 70 per cent after three years; (d) 60 per cent after four years; and (e) 50 per cent after five years or more, is as follows:

Year

Estimated Yield (£m)

2005-06

1,360

2006-07

1,740