Capital gains tax rates are set to stay the same for at least five years or at least the life of this Parliament, according to Chancellor George Osborne.
The current capital gains tax rates are 18% for lower rate taxpayers, who pay income tax at 20% or below, and 28% for higher rate taxpayers, who pay income tax at 40% or above.

Osborne told the Treasury Select Committee that he had set the rates to mitigate tax abuse and had considered reintroducing taper relief but felt this would make the tax system too complicated.

‘I certainly regard [the change] as permanent and am not planning to revisit this decision in this parliament,’ he said.

‘I took the view that CGT was being abused. A rate of 18% was so much lower than income tax that a multitude of schemes were created to shift [capital gains] into income and it was a hole that needed to be plugged.’

Responding to questions about how he came to the 28% figure, Osborne said he make the Treasury’s notes available to the committee.

‘We kept it at 18% for basic rate taxpayers, which is around half of the people who pay CGT, and raised it to 28% for higher rate tax payers.’

‘We also increased the entrepreneurial allowance to £5 million and kept the annual allowance. I accept it is a tax rise and non-one likes a tax increase.’

Entrepreneur’s Relief is also pegged – with the lifetime threshold set at £5 million and the capital gains tax rate at 10% from June 2010. The 4/9 deduction at 18% was scrapped.