§ Mr. FlightTo ask the Chancellor of the Exchequer (1) on what he bases his assessment that the changes to796W capital gains tax announced in the pre-Budget report will not create new loopholes for the treatment of income as capital gain; [25200]
(2) what measures he has taken to ensure that changes to capital gains tax, announced in the pre-Budget report, will not permit treatment of income as capital gain. [25219]
§ Mr. Andrew SmithThe proposed modifications to the taper relief rules for business assets are not expected to give rise to the creation of schemes for converting income to capital gain to any significant extent because the effective capital gains tax rate of 10 per cent. will not be reached until the asset in question has been held for two years, and because there are rules already in place which are designed to ensure that income is charged to income tax.
We shall, however, be keeping the position under close review and will not hesitate to take action to protect the income tax yield if such schemes are introduced.