The UK government has announced that the current rate of capital gains income tax will be reduced by £9,000 for businesses in the highest-earning 20% of earners, as part of a plan to slash taxes for large multinationals.
The change comes in the UK’s capital gains and dividends tax bill.
The government has also announced it will introduce a new rate of personal tax on income above £80,000, which will be levied on any money received from capital gains or dividends from companies that pay the tax.
The move is part of the Government’s plans to cut the UK tax bill by £8.7bn over the next five years, the BBC’s political editor Nick Robinson said.
The cuts are part of an ambitious package of tax reform announced by the Prime Minister, Philip Hammond, in the Budget.
The UK is one of the highest earners in the world and the government wants to see the rate of income tax dropped to a level below where it is now, and see it gradually rise to the level of income earned by the top 1%.
The government wants this to happen before 2020, and the changes announced today mean that by 2026, the capital gains rate will be £9.5bn lower, and personal income tax on this will be paid at a rate of 25%.
The changes are part-funded by a tax rebate, which is paid by the UK taxpayer on income earned from capital gain and dividends.
The chancellor, Philip Brown, said the new tax will help the government tackle the “unfairness” of tax in the country, and cut the tax bill of the UK average earners by £3,400 a year.
“We know that when we’re fighting tax avoidance, it’s often unfair to the UK and it is unfair to taxpayers,” he said.
“That’s why I’m announcing today a new, fairer and more just approach for people and businesses who earn income in the high-earner bracket, as well as those who earn less than £30,000 a year.”
The new capital gains, dividends and capital gains threshold The changes will also see the UK income tax rate on profits above £50,000 rise from 12.5% to 15%, with the income tax threshold for the highest bracket rising from £80.1m to £82.2m.
The rate of corporate income tax rise from 15% to 20% The UK has a capital gains system, whereby income earned over £50 million can be taxed at a 15% rate.
This rate is lower than that for most other countries in Europe.
However, the UK does not tax corporate profits above the threshold of £2.5 billion.
The Government has announced a new capital gain threshold of up to £5 billion in 2020-21, which would bring the tax to £18 billion.
As part of this, the Government will also be introducing a new threshold of $5.4 billion, which it will use to introduce a 25% corporation tax rate.
The capital gains thresholds are the highest in the developed world, according to the Tax Justice Network, which campaigns on behalf of those who pay a lower rate of tax.
It estimates that this new rate would raise £1.2 billion a year in revenue.
The current tax threshold will rise to £60.1 million in 2020 from £50.1 in 2020.
The Treasury said the changes were part of its “fiscal consolidation plan” that will see the government’s tax burden shrink to 5.6% of gross domestic product in 2020, down from 6.6%.
Mr Brown said the reforms were part the Government was taking a “balanced approach” with respect to taxation, adding that the government would continue to “target tax avoidance”.
“The capital gains allowance is an important tax relief that helps millions of UK families, particularly those in the very highest income bracket, pay their fair share,” he added.
“I welcome this progress on taxation and I am confident that the tax system will continue to work well for everyone, even the wealthy.”
The government will also continue to target tax avoidance by foreign investors, as it was expected to reduce its tax bill in the coming years.
“The Government will continue our efforts to crack down on foreign investment avoidance, particularly by investment firms with operations in the United Kingdom, which we will be introducing new measures to stop,” Mr Brown added.
The announcement came as the UK Treasury revealed that the total value of its capital gains exemption would fall from £10.4bn to £6.3bn by 2027, as a result of a new tax on foreign investments.
The value of the capital gain exemption has also been cut from £5.6bn to the current level of £3.2bn, meaning the UK would pay a £1,000 tax on every £2,500 earned by a foreign firm.
The Chancellor’s Budget is set to come into effect on February 1.
The new income tax system is expected to be introduced by