- Speculation is mounting that the government could raise Capital Gains Tax (CGT) rates in the upcoming Budget to align them more closely with income tax rates in an effort to boost Treasury revenues.
- Key figures including Andy Burnham and John Healey have been warned that attempting to increase CGT to raise funds could fail, as investors are likely to alter their behaviour to minimise tax liabilities.
- Figures show the Treasury collected £198 million in CGT in August—an increase of £8 million compared to August last year—though overall CGT receipts since April remain lower than during the same period last year.
- Tax experts from Quilter and AJ Bell highlighted that CGT is one of the most behaviourally sensitive taxes, warning that higher rates often lead investors to hoard assets, accelerate disposals prior to changes, or utilise tax-efficient wrappers like ISAs.
- Analysts suggest that while increasing CGT rates appears lucrative on paper to offset potential tax cuts elsewhere, historical evidence demonstrates that actual yield rarely matches Treasury forecasts due to changes in investor activity.
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