The chancellor has increased higher rate capital gains tax to 24 per cent and lower rate to 18 per cent.
In the Budget today (October 30), Rachel Reeves said the higher rate will increase from 20 per cent to 24 per cent, with the lower rate jumping from 10 per cent to 18 per cent.
This tax is charged on profits made from a sale of assets such as selling a second home or investments.
“We need to drive growth, promote entrepreneurship and support wealth creation while raising the revenue required to fund our public services and restore our public finances,” Reeves said.
“This means the UK will still have the lowest capital gains tax rate of any European G7 economy,” she added.
Overall CGT generated £14.4bn in revenue for the Treasury in the 2022/23 tax year.
However, figures for that year show that only 369,000 people paid this tax — a relatively small proportion of the population — although a figure that has doubled over the past decade.
“Alongside these changes to the headline rates of capital gains tax, we are maintaining the lifetime limit for business asset disposal relief at £1mn to encourage entrepreneurs to invest in their businesses,” Reeves said.
Business asset disposal relief will remain at 10 per cent this year, before rising to 14 per cent in April 2025, and to 18 per cent from 2026/27 maintaining a significant gap compared to the higher rate of capital gains tax.
Reeves said: “Together, the OBR say that these measures will raise £2.5bn by the end of the forecast.
“In a sign of this government's commitment to supporting growth and entrepreneurship, we have already extended the enterprise investment scheme and the venture capital trust schemes to 2035 and we will continue to work with leading entrepreneurs and venture capital funds to ensure that our policies support a positive environment for entrepreneurship.”
sonia.rach@ft.com
