§ Mr. HobanTo ask the Chancellor of the Exchequer what the capital gains tax rate would be if the current yield was maintained but taper relief was abolished. [32864]
§ Dawn PrimaroloThere is no separate capital gains tax rate. Capital gains are taxed on individuals using the income tax savings rates: 10 per cent., 20 per cent. and 40 per cent. The rate depends on how far the individual's income has used up the starting and basic rate bands. A rate of 34 per cent. applies to trusts.
The cost of taper relief for 2001–02, the latest available year, is £580 million.
Assuming an across the board cut in tax rates applicable to capital gains and ignoring behavioural changes, the relevant tax rates applied to individuals would be 7.4 per cent., 14.8 per cent. and 29.6 per cent. The rate for trusts would be 25.2 per cent.