Sean Drury, partner and head of tax at Blick Rothenberg says equalising income tax and CGT rates would see a fundamental shift in taxing gains, creating more tax complexity and stifling investment, putting the UK out of sync with other G7 nations
There has been lots of speculation about whether the UK might align income tax and capital gains tax (CGT) bands, but this raises a number of practical questions about the impact and whether it is even feasible. It is not as simple as taxing capital like income; they are fundamentally different.
The principle of taxation on ‘gains’ has existed in history for far longer than the principle of taxation on income and therefore these principles have been set through centuries of experience.
Although the current iteration of capital gains taxation only came into existence initially in 1965 by James Callahan, prior to that the nuance on the taxation of ‘realised gains’ was often cases around whether there was a profit motive in the sale of an asset and then the gain becoming taxed as profit at an income tax rate, for example in the case of Californian Copper Syndicate v Harris (Surveyor of Taxes) (1904).
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