Kevin Reed, Accountancy Age, Thursday 17 June 2010 at 09:31:00

CGT avoidance a billion pound problem, says prime minister David Cameron

The prime minister has bemoaned the tax system which is allowing people toturn 1bn in income into capital to dodge tax.

Speaking to Jeremy Vine on Radio 2, David Cameron said that tax evasion was a"problem".

"We are finding that a lot of people turn income into capital to evade thetax system, and we are losing about 1 billion because of that," said Cameron.

Concerns that raising the CGT rate closer to the 50% higher income tax bandwould see investors hold onto assets and leave the Treasury further out ofpocket might be avoided. Cameron hinted that that those who had already heldassets for a long period of time would receive concessions to avoid discouragingthem from selling.

"This is not about punishing savers,? Cameron added.

Further reading:

CGTand VAT red tape will hurt SMEs, tax advisers warn

Businessesfear CGT confusion, warns BCC

Oxfordprofessor backs CGT hike