Capital Gains Tax reforms prove unpopular
The 2008 Budget’s reforms to Capital Gains Tax (CGT) have not been well received by the insurance and wealth management industries.
The new CGT flat rate of 18% will make investing in single premium life assurance bonds a less attractive option, particularly for higher rate taxpayers paying 40% Income Tax on life policy gains, according to life assurer Friends Provident.
David Knight, research director at BDO Stoy Hayward Investment Management, said the CGT flat rate poses concern for the Life Offices, who are the main sellers of single premium investment bonds.
He said: “The insurance industry has lobbied the Treasury to point out that this perceived ‘simplification’ of the tax system appears to be the proverbial hammer to crack a nut.”