§ Mr. Gerald HowarthTo ask the Chancellor of the Exchequer what was the yield for capital gains tax for the years 1987–88, 1988–89, 1989–90 and 1990–91; and what is the anticipated yield for 1991–92.
§ Mr. MaudeThe following table shows the receipts of capital gains tax and the estimated total liability to capital gains tax arising on gains realised in each of the years since 1987–88. Capital gains tax receipts in any year reflect liabilities for the previous and earlier years.
Capital gains tax receipts in the year Estimated capital gains tax liabilities on gains realised in the year Year £ million £ million 1987–88 1,379 2,500 1988–89 2,323 1,900 1989–90 1,854 12,100 1990–91 21,855 11,200 1991–92 11,400 11,500 1 1991–92 Financial Statement and Budget Report forecast. 2 Provisional. These figures exclude capital gains of companies taxed within corporation tax.
§ Mr. Gerald HowarthTo ask the Chancellor of the Exchequer what percentage of capital gains tax paid was paid at 40 per cent. in(a) 1988–89, (b) 1989–90 and (c) 1990–91.
§ Mr. MaudeCapital gains tax receipts in 1988–89 correspond to gains realised in 1987–88 and earlier years which were taxed at a flat rate of 30 per cent.: no capital gains tax was paid at 40 per cent. in 1988–89.
It is estimated that the proportion of capital gains tax receipts attributable to liabilities charged at the higher rate 383W of 40 per cent. was about a half in 1989–90 and three quarters in 1990–91. The increase in the proportion mainly reflects the reduction between 1989–90 and 1990–91 in receipts attributable to gains realised in 1987–88 and earlier which were taxed at 30 per cent.
These figures exclude gains realised by companies which are chargeable to corporation tax.
§ Mr. Gerald HowarthTo ask the Chancellor of the Exchequer what is the number of staff employed by the Inland Revenue in regard to capital gains tax; and what was their cost for the latest year available.
§ Mr. MaudeThe estimated staff usage on capital gains tax work in 1989–90 was 1,261 man years, with a direct cost of some £27.5 million.
§ Mr. Gerald HowarthTo ask the Chancellor of the Exchequer what is the revenue cost for the latest year available of the loss allowance provisions within the capital gains tax system.
§ Mr. MaudeI regret that appropriate information is not available centrally on which to base a reliable estimate.
§ Mr. Gerald HowarthTo ask the Chancellor of the Exchequer what was the breakdown for capital gains tax receipts as between equities, property, Iand and other capital gains for 1990–91.
§ Mr. MaudeThe provisional estimate of receipts from capital gains tax in 1990–91 is £1,855 million. It is estimated that about two thirds of these receipts arose from gains on shares and other financial assets with the remainder attributable to gains on land, property and other tangible assets. For a more detailed breakdown by asset type of net chargeable gains arising from disposals made in 1987–88, I refer my hon. Friend to table 11.6 of "Inland Revenue Statistics 1990". The figures exclude gains realised by companies which are chargeable to corporation tax.
§ Mr. Gerald HowarthTo ask the Chancellor of the Exchequer what is the current capital gains tax percentage change on equity gains in (i) the United States of America, (ii) Germany, (iii) Japan and (iv) France; and what information he has as to whether there is a time limit to the application of any equity change on gains in these countries.
§ 4. Mr. MaudeThe latest available information is given in the table, which is supplemented by notes.
The general rule in these countries is that if gains are taxed at all they are added to income and taxed at the ordinary income or corporation tax rate as appropriate, but various reliefs and exemptions may apply.
None of these countries has the equivalent to indexation which substantially reduces the effective rate of tax in the United Kingdom. Apart from Japan, none of the countries has an equivalent of the United Kingdom annual exemption.
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Nominal rates of tax on equity gains of Country Individuals Per cent. Companies Per cent. USA1 15 or 28 plus state tax 15–34 plus state tax Germany2 19–53 50 10–50 plus local 37.5 plus local taxes Japan3 taxes 5–15 17–20 France4 16 or 5–56.8 34 Notes:
USA Most states impose a state tax on both individuals and companies. In California, the most populous state, the top rate of 9.3 per cent. produces effective maximum rates of approximately 34 per cent. for individuals and 40 per cent. for companies. The tax rates are the same for long-term gains (i.e. on assets held for more than one year) and short-term gains (on assets held for less than one year).
Germany Private gains for individuals are not subject to income tax unless they arise from sale of equities within 6 months of date of acquisition or from disposal of more than 1 per cent. of shares in a corporation in which the individual owned a substantial interest (more than 25 per cent. of share capital). Companies' gains are taxable however long an asset has been held.
Japan The first 500,000 yen (£1,527 at latest available purchasing power parities rate) of gains of individuals in a year are exempt. Only one half of long-term gains (on assets held more than 5 years) is taxable. Individuals may elect to be taxed on equity gains at 20 per cent. (plus local taxes), in which case the special deduction does not apply and the whole gain is taxable. Companies' gains are taxable however long an asset has been held.
France Special 16 per cent. rate applies where individual has long-term gain (on assets held for at least 2 years) or gain on sale of shares which constitute part of a substantial interest in a company. Long-term gains of companies are taxed at 19 or 25 per cent. depending on the type of security held.