Capital transfer tax: an obituary

In the Budget of March 1981 the Chancellor made changes which will produce a dramatic reduction in the real burdens of most potential payers of Capital Transfer Tax (CTT). Even without sophisticated tax avoidance, over 99 per cent of wealth owners will now be able to pay zero CTT when they hand on their assets. The burden to be borne by most of the remaining one per cent has also been greatly reduced. The purpose of this note is not to explore either the reasons, or the choice of timing, for what is effectively the demise of CTT; nor to speculate about why generosity of what is in fact implied. Nor is this a repeat of the arguments for doubting the case put forward for treating agriculture in particular as a special case-see Sutherland (1980). Here is simply a history of CTT set out schematically in Table 1; and with calculations at successive dates of nominal and real tax rates in Tables 2-5. Comparisons with other OECD countries up to the late 1970s are to be found in OECD (1979).