There is a hefty tax most of us haven’t had to worry about until now – but growing numbers will be ensnared in its net and bills could go through the roof overnight.
uncertain
bills → be → roof
The Government is reportedly eyeing up a capital gains tax (CGT) hike to raise some much needed cash.
uncertain
Government → eye → cash
You pay CGT when you sell something you own and make a profit on it.
asserted
you → pay → it
The Government demands a chunk of that profit, except in a few circumstances.
asserted
Government → demand → circumstances
You don’t have to pay it if you sell your own home for more than you paid for it – but you do on any other properties you own.
asserted
you → have → properties
You don’t pay it on stocks and shares held in an Isa – but you do on all other investments.
asserted
you → pay → investments
Even sales of classic cars, paintings and jewellery can incur a bill.
asserted
sales → incur → bill
Now, with just over a month to go before the Budget, countless think-tanks, ministers and other organisations are calling for Chancellor John Healey to whack up capital gains tax so that it’s in line with income tax rates.
asserted
it → go → rates
Capital gains tax bills are already hitting new highs.
asserted
bills → hit → highs
A record £24.2billion was paid in 2024/25 – up 89% in just one year
That would mean the rate for basic rate taxpayers would lift from 18 to 20 per cent and for higher rate taxpayers it would leap from 24 to 40 per cent.
It would mark the second hike in two years – the latest by former Chancellor Rachel Reeves came into force as recently as April.
asserted
latest → pay → April
CGT bills are already hitting new highs.
asserted
bills → hit → highs
A record £24.2billion was paid in 2024/25 – up 89 per cent in just one year.
asserted
record → pay → year
At first, it was largely wealthier investors paying up.
asserted
it → pay → ?
Now it’s smaller investors too as the CGT annual allowance was hacked back by the previous Conservative government from £12,300 to £6,000 and then £3,000 in rapid succession.
asserted
allowance → ’ → succession
The number of people who paid it shot up by 45 per cent to 584,000 in 2024/25.
asserted
who → pay → 2024/25
You may say that equalising with income tax is fair enough, that investors should pay as much tax as workers.
uncertain
investors → say → workers
After all, buying an asset, watching its value rise and then selling it hardly takes as much effort as toiling at work all day or night.
asserted
value → buy → work
But a growing chorus of financial experts warn that investors need an incentive to take a chance with their cash and must be rewarded for their entrepreneurial spirit.
asserted
investors → grow → spirit
‘Investing involves putting your capital at risk,’ he says.
asserted
he → involve → risk
‘There is no guarantee a business will succeed and investments can make a loss.
asserted
investments → be → loss
That is very different to getting a salary.’
asserted
That → get → salary
He points out that HMRC’s own modelling suggests that if CGT was raised by
10 per cent it would result in lower tax receipts because people would act to reduce their bills by, for example, sitting on assets rather than selling them.
uncertain
people → point → them
In fact, figures released yesterday reveal this may already be happening.
uncertain
this → release → fact
Say you bought a buy-to-let or holiday home ten years ago for £100,000 and sell it for £140,000 today.
asserted
you → say → 140,000
On paper you have made a £40,000 profit – on which the taxman will want a hefty slice.
asserted
taxman → make → slice
But over that decade inflation has been running hot, which means that your property is worth no more in real terms than it was when you bought it.
asserted
you → run → it
You haven’t made a profit at all.
asserted
You → make → profit
Countless think-tanks, ministers and other organisations are calling for Chancellor John Healey to whack up capital gains tax so that it’s in line with income tax rates
asserted
it → call → rates
So, if you’re worried you may be hit by another CGT attack in the Budget, what can you do?
uncertain
you → ’re → what
First, it is rarely sensible to act on speculation – you don’t want to do things that you’d regret if nothing is announced on the Budget on October 28.
asserted
nothing → act → October
However, if you’re already in the process of or have decided to sell something that would incur a capital gain, it may be worth getting a wriggle on.
uncertain
it → ’re → wriggle
When Reeves increased the CGT rates she did it overnight – there’s nothing to stop Healey doing the same.
asserted
Healey → increase → same
I’m currently selling a property and admit I’ve been pretty lackadaisical about getting it tied up.
asserted
it → sell → property
But now, by hook or by crook, I’m determined to get it done by the Budget.
asserted
it → ’m → Budget
The rates may not go up but it’s a reasonably safe bet that they won’t go down.
uncertain
they → go → ?
If you hold investments outside of a stocks-and-shares Isa and have some of this year’s allowance left, you can sell them and buy them again in an Isa wrapper.
asserted
you → hold → wrapper
This process is called Bed and Isa and can be taken care of by your investment platform.
asserted
process → call → platform
If you’re married or in a civil partnership, you can also move assets between you to take advantage of both of your CGT allowances.
asserted
you → ’re → allowances
This can also be helpful if one of you pays a lower tax rate.
asserted
one → pay → rate
Investors may also consider selling shares gradually to take advantage of each year’s allowance.
uncertain
Investors → consider → allowance
…and 9 more, not listed.
The Aporia
