Tax experts warn against rushing through CGT reform

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The Independent Online

The nation's leading tax experts have warned the Treasury that it risks "unintended consequences" from rushing capital gains tax (CGT) reform.

In a sharp intervention into what is becoming one of the most divisive issues between the coalition parties, the Chartered Institute for Taxation (CIT) is calling for a more considered approach to this and other tax reforms.

John Whiting, the CIT's tax policy director told The Independent: "It is important the Government handle these changes carefully and allow adequate time for consultation on the details, inside and outside Parliament.

"The lesson of previous reforms to CGT is, if you make complex tax changes without thinking them through and without taking the time to get things right, you end up with unintended consequences."

In recent years CGT has been subject to radical changes, leading to many anomalies. For example, the different tax bills levied on people depending on how long they had owned shares or property – known as "tapering".

The former Labour chancellor, Alistair Darling, moved to a unified rate of 18 per cent, but replaced taper relief with entrepreneur relief. Rules on indexation for inflation have also been changed with little or no notice. There are fears that a sudden change in CGT could lead to a fire sale of buy-to-let homes, shares and private equity stakes.

The Chartered Institute of Taxation argues that a new joint tax committee of the House of Commons and the House of Lords and a longer timetable for tax reforms would make mistakes less likely.

Decisions on the future of CGT will be announced in this month's emergency Budget by the Chancellor, George Osborne.

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