Taxpayers should prepare for Labour to hike the rate of capital gains tax (CGT) in its autumn budget, a leading tax firm has said.
Blick Rothenberg chief executive Nimesh Shah said Sir Keir Starmer has “clearly signposted” that the budget will be “painful” for higher earners and wealthier taxpayers.
The bleak picture painted by the prime minister in a news conference yesterday came after chancellor Rachel Reeves accused the previous government of leaving a £22bn “black hole” in the nation’s finances.
“One obvious option to [fix] this without breaking Labour’s election promises is by raising CGT,” Mr Shah said.
“The prime minister and chancellor seem to be acting with urgency when it comes to tax changes, so taxpayers will need to prepare now for a likely mid-year CGT rise.”
The tax firm boss said the potential changes to capital gains tax – which is essentially a levy on any profit you make when you sell or “dispose of” an asset – could “encourage individuals to leave the UK and become a non-UK tax resident”.
“Currently CGT raises less than 2% of the total tax take – it raised £14.5bn in 2022-23, and this is £2.5bn down from the previous tax year.
“To improve that tax take the chancellor could potentially increase the rate of CGT to 25%-30%, and apply a lower rate, of say 20%, for sales of business assets to support entrepreneurial growth.”
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