Over 65s could be exempt from CGT rise-papers

George Osborne is preparing to unveil a range of key-opt outs to CGT rises, including for Britons approaching retirement, as opposition grows against a blanket tax hike.

The Chancellor is believed to be looking at a range of exemptions for both entrepreneurs as well as the over-65s, according to the Daily Telegraph.

A source close to Mr Osborne told the paper there would be "generous exemptions".

Taper relief on long term assets is also being considered; a proposal favoured by the Tories but not by senior Liberal Democrats.

Pressure is growing on the Treasury to provide exemptions to a hike on non-business assets from the current 18%.

A group of Tory MPs met the new Chancellor last week to demand he does not impose a rate of more than 25% on anyone.

Meanwhile, John Redwood MP, who is leading the campaign against the CGT proposals, said he had received over 2,000 letters from members of the public worried about their investments.

"Huge numbers of people around the country have urged the government not to stick up capital gains tax on all assets and it clear that the government is listening carefully and trying to find the best solution," the former cabinet minister said.

Campaigners are pushing for taper relief instead of exemptions because they say it will be simpler and easier to steer through Parliament.

Mike Warburton, tax director at Grant Thornton, told the Telegraph: "There is nothing inherently difficult in applying CGT rates with a discount based on age. We already have age related discounts in the tax system.

"But taper relief would be simpler. It is well understood by taxpayers and agents and in my view would be preferable."

Redwood said: "It seems to me clear that the best answer is to charge 40% on short term gains and taper it down to a much lower rate for long term gains.

"This could increase revenues and reduce the burden on entrepreneurs and long term savers."

Capital gains tax is currently set at 18%, but David Cameron has said he wants to raise it to a rate similar to income tax. That could mean tax rates for non-business assets such as the profits from second home sales more than double to 40%.