Capital gains tax climbdown risks coalition

Small-scale investors would be hit by a reduction in the CGT threshold
Small-scale investors would be hit by a reduction in the CGT threshold

By staff

Energy secretary Chris Huhne has fired a warning shot about the coalition's cohesiveness after reports emerged that George Osborne may make concessions on capital gains tax (CGT).

The planned rise in CGT, which will help offset the cost of the Liberal Democrats' rise in the income tax personal allowance to £10,000, has already proved a sticking point for senior Tory campaigners like David Cameron's leadership rival David Davis and John Redwood.

According to the Sunday Times newspaper their disquiet about proposals to raise CGT have already prompted concessions from the chancellor.

It suggests he has now ruled out a reduction in the CGT threshold from £10,000 to £2,500, as well as the creation of a top rate of 50%.

Mr Huhne warned that moves by Mr Osborne to avoid raising CGT would place the coalition's agreement on tax in peril.

Speaking to the same newspaper, he said: "One of the things people might say is: I don't like that. So they pull at that little piece of string and you find that all the rest of the woolly jumper is unravelling.

"You have to be very, very careful. If you move something, everything else changes."

Mr Huhne, who lost to Nick Clegg in the Lib Dems' last leadership campaign, said Mr Davis and Mr Redwood were not taking into account "the world of government" and urged them to look beyond their single-issue campaign.


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