Entrepreneur's relief extended to £5m

George Osborne has announced a 10% increase in the capital gain tax rate for higher rate tax payers.

The Chancellor of the Exchequer said in his emergency Budget speech today that tax payers earning above the higher rate of just over £40,000 per annum will be subject to a new higher rate of 28% for any capital gains they make over £10,100 in a single tax year. The change comes into effect at midnight tonight.

Standard rate tax payers will see no increase in the rate of CGT that they pay.

Osborne also told the House of Commons that the entrepreneur’s lifetime relief from CGT will be increased from £2m to £5m, reflecting the coalition government’s agreement that any increase in CGT should not penalise wealth creators.

Osborne defended his decision not to hike the higher rate of CGT above 28% by saying that any additional increase would have generated a “small increase in revenue”.

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