Rise in Capital Gain Tax UK could hit basic rate taxpayers

The rise in Capital Gains Tax will hit some middle income earners who have invested in assets such as property over many years, tax experts have warned.The announcement made in the budget last month by Chancellor George Osborne, revealed that the CGT rate for high earners will increase from 18% to 28%.  However, lower earners could also be hit by the rise if the sale of an asset takes them into the higher income threshold.  Any gain from such a sale would be added to your income and may push you into the higher rates of tax.Property has been used by some investors instead of a pension and they may now be better off holding on to the properties and renting them out if they can.  That way, they can benefit from the monthly rental income, rather than using a lump sum from a sale for a pension (and being charged CGT on the lump sum).Fortunately, the rental market is currently quite strong.  The government’s move can be seen as quite positive as it had not raised CGT for higher rate taxpayers to the 40% rate it was at before the flat 18% rate was introduced.  If you bought your investment property years ago, you will still be better off, as 28% is still less than the previous of 40%.