The Treasury has said rumours that the Chancellor is planning to increase the rate of capital gains tax (CGT) to between 33% and 39% was “pure speculation”.
Reports were released suggesting Chancellor Rachel Reeves was set to announce this at the Budget this month.
It was reported this would be to fill the financial ‘black hole’ discovered by the government after the general election.
CGT applies when someone is disposing of an asset that has increased in value, such as a second home or certain personal possessions worth more than £6,000, except for a car.
Higher-rate taxpayers must currently pay 24% on gains from a property. The maximum rate is 28%, which applies to gains from ‘carried interest’ where someone manages an investment fund.
The government has denied it would increase the rate to a maximum of 39%.
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An HM Treasury spokesperson said: “This reporting is not based on government modelling – we do not recognise it. This is pure speculation.”
Taking heed of CGT rumours
Despite this denial, a rise in CGT has long been speculated since the Budget was confirmed to take place on 30 October.
An analysis from Mortgage Solutions last month suggested a rise could create “landlord prisoners”.
Reacting to the recent speculation, Rachael Griffin, tax and financial planning expert at Quilter, said: “Increasing CGT rates would likely only incentivise people to hold assets for the long term rather than result in a quick and immediate increase in revenue.
“At this stage, nothing has been confirmed, so unless realising gains from investments or selling a second home or business had already been in your plans, making decisions based on what might happen is not sensible.”
