Ex-cabinet minister Fox says abolish CGT for up to five years

Former Conservative cabinet minister Liam Fox has called on the Government to scrap capital gains tax for up to five years to boost economic growth ahead of this month’s Budget.

Speaking to the Institute of Economic Affairs last week, Fox said he would like to see CGT suspended and then “reintroduced at a more sensible level”.

He said: “I would like to see capital gains reduced, if possible to zero, for a defined period – three to five years – before being reintroduced at a more sensible level.

“This would create a tax window where businesses that are sitting on assets might be encouraged to sell, investment in capital becomes more attractive and where hundreds of thousands of second homes might come on to the market.”

Fox believes the drop in CGT would lead to 750,000 second homes coming onto the market, boosting construction and stamp duty receipts. He stops short of arguing for the permanent abolition of CGT and favours a taper relief with low taxes for longer holds, far below the current level of 28 per cent.

Presently, there is anannual tax-free allowance of £10,600, followed by a charge of 18 per cent for gains made over that level or 28 per cent if your income is over £35,000.

Model Works founder Brian Hall says: My preference would be to keep our powder dry with respect to capital gains tax. I think we should recognise that we need to promote home ownership and implement policies that encourage this transition over time. It may be appropriate to pull this big lever at some point but this should be done in conjunction with other levers. And we need to be certain in our understanding of what we want to achieve buy pulling it.”