Capital Gains Tax

HC Deb 09 November 1987 vol 122 cc63-4W

Mr. Redwood

To ask the Chancellor of the Exchequer what would be the net cost to the Exchequer in a full year if capital gains tax were abolished and replaced by the taxation of gains made in less than one year at income tax rates.

Mr. Norman Lamont

The yield of capital gains tax would be reduced by more than 90 per cent. There would be a comparable reduction in the yield of corporation tax on companies' capital gains if gains on assets held for over a year were exempted.

Mr. Redwood

To ask the Chancellor of the Exchequer what extra revenue would result if all the indexation on capital gains tax was dropped.

Mr. Norman Lamont

About £600 million at the level of capital gains expected to be realised by individuals and trusts during 1987–88, as estimated for the 1987 Budget. If this change extended to companies' capital gains, there would also be an extra yield of corporation tax of some £500 million.