A proposed increase in capital gains tax (CGT) will affect thousands of buy-to-let investors and people who have small shareholdings in businesses, one organisation has said.

The Institute of Directors (IoD) advised the government to be aware of the strength of feeling the proposed rise has caused among the business community and ordinary investors.

Last month the government announced that there will be an increase in CGT, which could rise to up to 40 per cent.

Miles Templeman, director general of the IoD, commented: “The more we look at the CGT increase, the more we can see that it will directly penalise many thousands of people who cannot be described as rich.”

Mr Templeman suggested that by introducing a taper relief, long-term investment would be supported.

“If that is not introduced,” he added, “then a broad definition of the business assets that will be protected from the increase, including all shares that are held by directors and employees, will be vital.”

Chancellor George Osborne will announce further details about the rise at the emergency Budget on June 22nd.

Posted by Morag Lyall

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Published on: June 7, 2010