Griffin added that the government opting to increase CGT rates but not so much as to align them with income tax rates is perhaps an attempt to at least partially alleviate the issue of people sitting tight.
“Over the past few years, changes to the CGT landscape such as the significant reduction in the annual exempt amount coupled with cuts to the dividend allowance have drained the life out of general investment accounts and made ISAs, due to their tax efficiency, even more important for all,” she said.
“Similarly, for those looking for simplicity in their tax reporting, onshore bonds have once again become a more useful 'tax wrapper'.
“In addition, higher rate and additional rate taxpayers may use an onshore bond to help shield income yields and investment gains from higher personal rates of tax on an arising basis."
Relief or panic escape?
Meanwhile, some industry members said the CGT changes should come as a form of relief as it was much lower than the predicted 39 per cent.
James Norton, head of retirement & investments, Vanguard Europe, said: “There will be some sense of relief that CGT has not been increased as much as anticipated – we hope this will maintain interest in and appetite for investing.
“Investing in a pension or Isa remains a simple and tax-efficient way to invest for long-term growth.
“Investing is a necessary part of helping people achieving their financial goals, whether that be a comfortable retirement, a deposit on a house, or money for a rainy day.”
Additionally, Toby Tallon, tax partner at professional services group Evelyn Partners, said since the election business owners have been on a rollercoaster of uncertainty in the run-up to the Budget with an array of tax rises predicted.
“They are today feeling the pain given the significant changes confirmed to CGT, IHT and employers’ NIC contributions,” Tallon said.
“These tax changes will leave many business owners questioning whether they should invest their time, energy, risk and money in starting and growing businesses.”
Discussing CGT, Tallon said: “While the increases in CGT rates weren’t as extreme as some feared, these hikes could still put off entrepreneurs from starting businesses in the UK and this could slow growth in the UK economy.”
Recent research by Evelyn Partners conducted with 500 business owners showed that if higher CGT rates were introduced in the Budget – as has happened today - 46 per cent of business owners would be deterred from starting a new business.”
Furthermore, nearly half (48 per cent) would consider moving their businesses abroad if tax changes were clearly unfavourable.
“We know of many business owners who were already packing their bags and preparing to move overseas because they feared what was to come,” Tallon said.
