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Capital gains tax increase for higher earners

Despite the fact there had been suggestions that the UK government would increase capital gains tax, across the board, to around 50%, George Osborne has delivered a far less severe change to the capital gains tax regime. For those in the lower and middle income ranges the capital gains tax level will remain at 18% but from midnight tonight those in the higher rate tax band will pay 28%.

In many ways David Cameron and George Osborne are "biting the hand that feeds them" by attacking higher earners in the UK but in reality the hit will be far less than many had expected. That's not to say an increase of 10% in the capital gains tax rate for higher earners will not hit them in the pocket but it is far better than the proposed 50%!

However, there is no getting away from the fact that an increase in capital gains tax for high earners will make it less attractive to invest in the UK and will take money out of the economy. This comes at a time when the UK government is desperate for investment in the UK in order to shore-up companies which are in trouble and attempt to rebuild for the future. It will be interesting to see how traditional Conservative voters react to this increase in capital gains tax and whether indeed it does place some strain on the Conservative party and Liberal Democrat party coalition.

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