OK say someone works for a private company, gets paid 50k a year, and earns a bonus of 50k in shares, sells the shares but takes a loss and only gets 40k for them
50k,
8k taxable allowance
taxed 20% on 29,500 = 5900
taxed 40% on 12,500 = 5000
10k capital gains allowance
taxed 28% on 30,000 = 8400
total 19300
Then say you have a Doctor employed direct by the health authority earning 80k
8k taxable allowance
taxed 20% on 29,500 = 05900
taxed 40% on 42,500 = 17500
total = 23400
The reality is the person getting the shares, even after making a loss on those shares, still earns 10k more and pays less tax. And that’s at the 40% tax rate and not taking into account NI. We all get a raw deal from this, we have to pay more tax to make up the shortfall of these loopholes.
Its not just a matter of taking capital gains up to the income tax levels, they could meet somewhere in-between. Levelling the playing field between income and capital gains tax and allowances would give a boost to the income of the majority of the country.