The rise in capital gains tax (CGT) is a “very workable change”, according to David Doulton, director at Fair Investment Company.

This afternoon (June 22nd), chancellor George Osborne announced his emergency Budget, revealing that CGT will be increased to 28 per cent from midnight tonight.

However, before the speech many critics and companies including buy-to-let landlords had feared that the tax would increase to as high as 40 or 50 per cent.

Last month Mr Osborne had warned that it would increase to a rate similar to income tax.

The move has been implemented to close the ‘loophole’ that lead to high rate tax payers investing their assets in CGT at the original 18 per cent rather than pay 40 per cent on income generated assets.

Low and middle income taxpayers will continue to pay the 18 per cent rate.

Mr Doulton commented: “What [Mr Osborne] has done will still do something to close the gap due to the fact that CGT for low and middle income savers will remain at 18 per cent.”

Posted by Morag Lyall

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Published on: June 22, 2010