The coalition Government is planning to up the amount of tax that investors have to pay when they sell off assets. The rise is large, with a jump from 18% to 40% planned with the potential to even jump up to 50%.
The move will hurt investors that make their profits from property and shares the most, as now others can potentially cash in on their gains.
In fact, according to the most current figures two out of three financial advisors are planning to sell clients’ investments which will increase their tax rate.
The survey was conducted by 1st Exchange the financial technology company and showed that 60% of all financial advisers are planning to move customers away from assets that will include the new capital gains tax.
The official tax hike is rumoured to be announced next month during the emergency Budget with its start planned for the start of the next tax year in April of 2011.
Experts warn that while big investors will be affected by the tax increase, so will smaller investors with smaller portfolios, because most people will want to move towards gains on shares and property.
Head of research at Hargreaves Lansdown, Mark Dampier, stated that the tax is created on the concept on envy and that it is unfair and will create a burden on those that want to make a long term investment without worrying about the tax factor.
Property analyst Nigel Lewis stated that soon wealthy landlords will start selling off buy to let investments in order to avoid taking the large tax hit.
The Government has also announced that it will heighten the rates on business capital gains along with income tax but has not released the details.