CGT increase will lose Treasury £200 million in revenue warns think-tank

The rise in capital gains tax (CGT) to 28% for higher rate earners will see the Treasury lose £200 million in revenues as taxpayers opt to hold on to assets rather than sell them, according to think-tank the Adam Smith Institute.

The think-tank said it had studied the effects of raising CGT abroad, and warned that as taxpayers resist realising gains the negative impact on CGT revenues would more than outweigh the additional revenue raised in income taxes.

Eamonn Butler, director of the Institute, said: 'We have calculated they will lose £200 million in revenues,' he said. 'The government will gain around £600 million from increases to income tax, but lose £800 million from people sitting on their assets,' he added.

'You want people to be investing in shares in British companies, supporting British industry, and buying property to provide rental accommodation, and this will be a slight disincentive on people to invest and save.'