Chancellor Eyes Raising UK Capital Gains Tax to 40%
As UK debt has risen above £2 trillion, Chancellor Rishi Sunak is being advised by the Treasury to raise the top rate of UK capital gains tax to 40%.
The Chancellor is expected to deliver his next budget this autumn - normally held in October or November, but a second wave may push it back.
Current UK capital gains rates:
Basic rate taxpayers (total income up to £50,000) is 10% for gains (but 18% on residential property).
Higher rate taxpayers (income above £50,000) is 20% for gains (28% on residential property).
Under the proposed changes, capital gains tax rates would be raised to match income tax rates.
Capital gains tax (CGT) on asset sales would double from 10% to 20% for basic rate taxpayers, and from 18% to 20% for gains on property sales.
For higher rate and additional rate taxpayers, CGT could double from 20% to 40% on asset sales and 28% to 40% on property sales.
In addition, the Treasury has also held discussions over scrapping the various reliefs applied to CGT.
Those tax reliefs include:
Capital Gains tax-free allowance of £12,300 per person, per year (the CGT allowance is in addition to the UK personal income tax allowance)
Business Asset Disposal Relief (Entrepreneurs' Relief) - CGT is reduced to 10% for shareholders selling shares (when you own at least 5% of the business) and to business owners selling business assets, capped at a lifetime allowance of £1 million
Individual Savings Accounts (ISAs) - any capital gains on shares or funds held in an ISA are free from UK CGT
Pension tax relief - investment growth of the assets held within registered pension schemes is exempt from income and capital gains tax
Other potential tax increases being considered are:
Reducing pensions tax relief - potentially capped to 20 per cent so higher taxpayers will lose half the tax relief
Increase in petrol and other duties
A tax on online shopping
Reviewing inheritance tax, with a view that additional taxes can be claimed