§ Mr. CarringtonTo ask the Chancellor of the Exchequer what proposals he has to change the treatment for capital gains tax purposes of losses incurred in the disposal of shares held in a personal equity plan.
§ Mr. Norman LamontIt has always been the Government's intention that, provided a personal equity plan is kept in being for the minimum qualifying period of between one and two years, investments may be switched from one qualifying share to another without creating either a capital gains tax liability or an allowable loss. However, the Inland Revenue has now received legal advice which suggests that, contrary to this intention, losses from disposals of shares held in a plan may be allowable for capital gains tax purposes.
The Government therefore intend to include a proposal in the 1988 Finance Bill ensuring that a disposal of shares in a personal equity plan which is kept in being for the minimum qualifying period cannot create an allowable loss for capital gains tax purposes.
If enacted, the proposal will apply to any disposal made on or after today of shares held in a personal equity plan.