Reforming the Taxation of Capital Gains, Gifts and Inheritances

Robinson, Bill

doi:10.1111/j.1475-5890.1989.tb00336.x

Cited by 6 publications

(2 citation statements)

References 1 publication

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“…4 Stiglitz (1983) showed that capital gains tax rates can, in fact, be avoided altogether in a perfect capital market where transactions are costless by borrowing, hedging, accelerating losses, and deferring gains. In the United Kingdom, capital gains are treated more favorably than other forms of income because capital gains tax is payable in arrears, deferred on gifts, and gives relief on retirement and exemptions on death (e.g., Robinson (1989)). Thus a drop in ex‐day prices in a particular period cannot be related directly to the differential taxation of dividends and capital gains because the effective capital gains tax rates are not known.…”

Section: Institutional Frameworkmentioning

confidence: 99%

Ex‐Day Behavior: Tax or Short‐Term Trading Effects

Lasfer

1995

The Journal of Finance

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This study examines the behavior of share prices around the ex‐dividend dates before and after the introduction of the 1988 Income and Corporation Taxes Act that reduced substantially the tax differential between dividends and capital gains in the United Kingdom. We find that, in the pre‐1988 period when the differential taxation of dividends and capital gains is high, ex‐day returns are positive and significant. In contrast, in the post‐1988 period, ex‐day returns are, in most cases, negative and insignificant. Further analysis reveals that, while ex‐day returns are significantly related to dividend yield and to the length of the settlement period, they are not affected by the commonly used measures of transaction costs, such as the bid‐ask spread and trading volume, or by the day of week, month of the year, type of dividend distribution, or number of days to the actual receipt of the cash dividend. We conclude that taxation affects significantly ex‐day share prices in the United Kingdom.

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Section: Institutional Frameworkmentioning

confidence: 99%

Ex‐Day Behavior: Tax or Short‐Term Trading Effects

Lasfer

1995

The Journal of Finance

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“…34 This gives rise to some challenges resulting from the 'lumpiness' of these types of receipt, but Meade et al (1978, ch.7) identify several possible solutions using different approaches to averaging; the policy would be otherwise relatively straightforward to implement from an administrative -if not political -perspective. 35 Although proposals have been made along these lines in the past (Goodhart, 1988;Robinson, 1989), recently the option of taxing inheritances and gifts as income has not received as many backers as the lifetime receipts tax. 36 It is difficult to discern the reasons for this, but a relative lack of international examples -compared with a lifetime receipts tax -may be one explanation.…”

Section: Comprehensive Income Taxmentioning

confidence: 99%

Ways of taxing wealth: alternatives and interactions

Summers¹

2020

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This is particularly significant for assets that qualify for 100% business property relief for IHT, as well as CGT forgiveness on death. See further OTS (2019). 8 Over this period there have also been several changes to the scope of the tax base (e.g. in relation to capital allowances). 9 There are a few exceptions on transfers to foreign domiciled spouses not discussed here. 10 These criteria are drawn widely: for example, business property relief applies to shares in private trading companies invested on the Alternative Investment Market (AIM), even where the deceased had no involvement in the management of the business. 11 Those whose major asset is their home cannot effectively give this away if they need to continue living in it, because this would breach anti-avoidance provisions known as the 'reservation of benefit' rules, backed up by the pre-owned assets tax (POAT) rules.

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Taxes, dividend yields and returns in the UK equity market

Morgan

Thomas

1998

Journal of Banking & Finance

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Reforming the Taxation of Capital Gains, Gifts and Inheritances

Cited by 6 publications

References 1 publication

Ex‐Day Behavior: Tax or Short‐Term Trading Effects

Ex‐Day Behavior: Tax or Short‐Term Trading Effects

Ways of taxing wealth: alternatives and interactions

Taxes, dividend yields and returns in the UK equity market

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