Tax changes 'are threat to average savers'

Tuesday, June 1st 2010

A financial organisation has warned the government it will be harming average savers if it lowers the threshold on capital gains tax.

Fidelity International has urged Westminster to maintain the current level of £10,100 in order to avoid dragging those with savings to their name into the tax zone.

In 2007-2008, less than 250,000 people paid capital gains tax - but Fidelity believes this number could be in the millions if plans to cut the threshold are approved.

A decision is expected during the emergency Budget, set to take place on June 22nd.

While David Cameron's Conservative Party have remained silent on the issue, their coalition partners, the Liberal Democrats, have previously expressed a desire to see the level cut to £2,000.

Paul Kennedy, head of tax planning at Fidelity, said: "Our analysis shows that decreasing the tax-free allowance will result in millions of average long-term savers being dragged into a net that many believed was being set only for the rich."

A decision on raising income tax is also due in the forthcoming Budget.