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Capital Gains Tax

Oral Answers to Questions — Treasury – in the House of Commons at 2:30 pm on 13th July 2010.

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Photo of Gordon Banks Gordon Banks Labour, Ochil and South Perthshire 2:30 pm, 13th July 2010

What recent assessment he has made of the effects of the change in the rate of capital gains tax on the number of business start-ups.

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Photo of Mark Hoban Mark Hoban The Financial Secretary to the Treasury

The change in the rate of capital gains tax is not expected to have a material impact on the number of business start-ups. The lifetime limit on gains qualifying for the entrepreneurs relief-the 10% CGT rate-was increased from £2 million to £5 million in the Budget. That will benefit entrepreneurs and small business owners.

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Photo of Gordon Banks Gordon Banks Labour, Ochil and South Perthshire

I thank the Financial Secretary for his response, but does he share my concern that the change in capital gains tax will mean a reduction in businesses in the private housing rental sector, and with it, as predicted by Rightmove, a growth in rents and a shrinkage in the number of houses for rent? If so, what is he going to do about it?

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Photo of Mark Hoban Mark Hoban The Financial Secretary to the Treasury

I have not been promoted, Mr Speaker.

The changes to capital gains tax that we have introduced will ensure that the right tax regime is in place and that it is fair and responsible. The hon. Gentleman ought to remember, of course, that the capital gains tax rate for second homes prior to the Budget was 24%. It has now gone up to 28% for those paying higher rate taxes, but those on basic rate taxes will be paying only 18%.

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