Election 2010: Lib Dems would tax capital gains at same rate as income

The Lib Dems would more than double the rate of capital gains tax (CGT) to put it on a par with income tax.

Capital gains are currently taxed at 18%, but the Lib Dems want to increase this to the same level as income tax, which could see CGT rise to as much as 50%.

The Lib Dems made the announcement today as they unveiled their party manifesto, the last of the three main parties to do so.

In last month's Budget, Alistair Darling doubled the entrepreneurial relief for CGT in a bid to make it more attractive for what he called "wealth creators and innovators" to set up their own businesses.

The Chancellor also confirmed he would not increase CGT from its current rate of 18%.

Elsewhere, the Lib Dems pledged said they would increase the tax-free limit on earnings, to be  paid for by giving tax relief on pensions only at the basic rate.

The party has pledged to make the first £10,000 of earnings tax-free, up from the current level of £6475.

They say this will create a tax cut of £700 for most people and give an incentive to work and save.

Nick Clegg's party also promises to set up a ‘Creative Enterprise Fund' offering training, mentoring and small grants or loans to to help small businesses.

Yesterday, the Tories confirmed new businesses will pay no National Insurance (NI) in their initial year for the first ten employees, during the opening two years of a Conservative government.

Labour launched its manifesto on Monday with a pledge to slash more than £6bn off the cost of business regulation by 2015.

All the major parties are gearing up for a 6 May General Election, announced by Labour last week.