Capital gains tax increases should not punish long-term savers and investors, Fidelity International warns.

As it stands, savers and investors pay CGT at a rate of 18 per cent on any capital gains in excess of £10,100. But speculation is rife that the Lib Dem, Conservative coalition will soon push capital gains tax up to around 40 per cent.

Fidelity International claims that the talked about increase should only apply to short-term speculators who hold investments for less than 12 months, rather than affecting long-term savers and investors.

Commenting, Gary Shaughnessy, UK Managing Director at Fidelity International said: “The costs of an ageing population, increasing life expectancy and the medical costs associated with greater longevity present a significant potential financial burden on the taxpayer.

“Now more than ever, as we seek to reduce our substantial national debt, we need to be encouraging all members of society to make adequate provision for their financial needs later in life. Key to this is ensuring that the regime of capital taxation supports rather than discourages long-term investment.

“We are therefore particularly interested in defending the interests of prudent individuals who invest for the long term, most of whom have also lost out financially during the recession as a result of the prevailing very low interest rates on cash. We believe that these investors deserve to be treated differently from speculators who are looking only for short term gains.”

Fidelity is supporting calls to increase CGT for those seeking short-term speculative gains, Shaughnessy says: “We believe the fairest change would be to target CGT increases at short-term investors but if the government does increase CGT across the board, taxable gains should be reduced by the amount due to inflation or by taper relief. This avoids investors being unfairly penalised by being taxed on increases in value solely due to inflation.”

© Fair Investment Company Ltd