One effect of the proposed CGT changes:
If his proposal to increase the tax rate from 10pc to 18pc is left unchanged, Brewin Dolphin fears a flood of share sales before the start of the new tax year on April 5 that will artificially reduce prices.
A spokesman said: "If he confirms the changes, there will be a massive sell-off. AIM is illiquid and we feel there is a danger that this will concertina up into a very short period. It would be creating a false market as people sell out purely for tax reasons."
Brewin Dolphin, the largest private client adviser in the UK, has reviewed the 63 AIM companies for which it is corporate adviser, and found that "50pc of the shares are held by individuals who could be affected by the loss of taper relief". If the new CGT rules are confirmed, those investors would be "under pressure to crystallise gains this tax year".
Now there used to be a solution to this sort of thing, called "bed and breakfasting". You sold your stock to your broker in hte afternoon and bought it back at a pre-arranged price the next morning. You might pay a penny margin to him for the privilege. You thus crystalised your gains and or losses for CGT reasons.
I\’m a long way away in both time and distance from the details of the markets these days but I\’ve got the impression that you\’re not in fact allowed to do this these days. You can only crystalise such CGT positions by undertaking arms length transactions perhaps?
As I say, I\’m not sure about this, it\’s only an impression at the back of the brain somewhere. Bu if true it would be an interesting example of how one change has consequences further down the line.