More than 16,000 people under the age of 35 paid capital gains tax last year, amid expectations that Labour plans to upheave the tax in the Budget this week.
Figures from Bowmore Wealth Group found young people accounted for £338mn in CGT during the 2022-23 tax year.
There have been reports Rachel Reeves has her sights set on CGT, suggesting she may be urged to start charging capital gains tax on businesses and second homes after their owners die, removing the existing tax-free uplift on death.
Charles Incledon, client director at BowMore Asset Management, noted the high levels of CGT paid by younger investors was often the result of investments being made in tax-inefficient ways, such as through general trading accounts instead of Isas or pensions.
“Many younger investors are unknowingly defaulting to general trading accounts on popular platforms, where gains are subject to CGT.
"This can result in unexpected tax bills when shares are sold. However, using tax-efficient options, like Stocks & Shares ISAs or pensions, could significantly reduce or possibly eliminate these tax liabilities.
“It’s encouraging to see more young people getting involved in equity investments but too many are facing unnecessary tax bills that might have been avoided,” he explained.
alina.khan@ft.com
