The Chancellor has announced that the government will reduce the higher rate of capital gains tax from 28% to 20% and the basic rate from 18% to 10% for disposals made on or after 6 April 2016.
This is an unexpected and welcome change designed to support enterprise and investment in the UK. By reducing CGT, the Chancellor hopes that the incentive to invest in shares and other assets is increased, enabling businesses to access the capital they need to fund expansion and create jobs.
However, not all activity is to be incentivised, with the 28% and 18% rates of capital gains tax continuing to apply to gains made on carried interest and residential property. These two asset classes continue to be singled out and taxed heavily.
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