New figures from HMRC show that higher Capital Gains Tax revenues have come from investors selling their assets prior to an increase in rates by Rachel Reeves. Who would’ve thought?
In an explanatory document HMRC said “speculation” around CGT prior to the 2024 budget drove disposals. Funnily enough a cut in the CGT rate drove property transactions higher and thus increased revenue: “In the 2024 to 2025 tax year, the higher rate of CGT on residential property was reduced from 28% to 24%. This rate cut resulted in less tax being collected per transaction and per gain reported; however, earlier and additional transactions are expected to have been stimulated by the rate cut, which in turn resulted in additional reported gains and tax for this year.” Residential property transactions since fell in 2025/26…
High-tax enthusiasts at the IPPR think tank are claiming that higher receipts justify increasing CGT even more by bringing it in line with Income Tax rates: “Capital gains tax is an increasingly important source of revenue for the government, particularly following the unprecedented boom in asset values over the past two decades. Income from wealth is likely to become steadily more significant as technology adoption and automation accelerate in the coming years.” Unfortunately for the leftists they may find themselves disappointed by the results…
HMRC is being as explicit as it is able:
“At Autumn Budget 2024, the Chancellor announced that the tax rate at which gains qualifying for BADR are charged would increase from 10% to 14% from April 2025 and again to 18% from April 2026. Both increases were announced prior to implementation giving taxpayers an opportunity to bring forward disposals to benefit from the lower 10% rate. This contributed to a 45% increase in the number of taxpayers making BADR-eligible disposals in the 2024 to 2025 tax year from 42,000 to 61,000.”
“speculation around the possible implementation of tax increases at Autumn Budget 2024 on 30 October may have resulted in taxpayers bringing forward disposals. This can be seen by the increase in disposals and gains realised in September and October 2024 in Table 8c.2, followed by decreases in the subsequent months.”
A spokesman for the low tax campaign Cut My Tax said:
“The latest data reinforces the fact that CGT is a voluntary tax, paid only when people choose to dispose of assets. In 2024 they did so because they correctly feared that Labour would hike the rate in the autumn budget. We may now expect much lower CGT revenue for the rest of the Parliament as people will hold on to assets until Labour is turfed out”.
It’s a waiting game…
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