CGT relief will hurt employee share owners

At least 80,000 people will be negatively affected by the government's changes to capital gains tax, employee share ownership experts IFS ProShare have claimed.

At the EEF Manufacturers biennial dinner last night, the chancellor said the last minute CGT concessions he made in January, giving entrepreneurs a 10% tax rate on the first £1m of gains, would benefit 80,000 people over the next year.

ProShare, however, says that as many people will be hurt by the reforms.

The organisation says the current CGT regime sees basic rate taxpayers who have held shares in their employer for at least 2 years subject to a 5% CGT charge.

The chancellor’s changes mean that these employee shareholders will have to pay an additional 13% tax on any gain above £9,200 from April 2008.

'It's rather a sad irony that the number of people Alistair Darling says will benefit from his concessions are the same number as those who could lose out,' said IFS ProShare's head of public affairs Phil Hall.

Further reading:

ICAS: Taxpayers denied time to deal with CGT changes

CGT changes threaten workers share schemes