The Dangers of Raising Capital Gains Tax Rates at the Autumn Budget

CREATED BY HELEN BEAUMONT Published: 25/06/2025 @ 09:00AM #capitalgainstax #taxratesdebate #cio #economicrecovery #autumnbudget

The debate surrounding Capital Gains Tax rates intensifies as the Chancellor approaches the Autumn Budget. While potential increases aim to address fiscal challenges, history suggests that drastic rate hikes may hinder rather than help economic recovery ...

Capital gains tax, A burden on our wallets, But a must for growth

The prospect of increasing Capital Gains Tax (CGT) rates has resurfaced as a key policy discussion. The Chancellor, amidst pressing budgetary concerns, might be eyeing CGT as a way to shore up financial deficits. However, there exists a substantial risk that this course of action could have adverse repercussions on both taxpayer behaviour and overall economic activity.

Historically, CGT rates have faced scrutiny, particularly given their reliance on a small pool of high-value taxpayers!

In the financial year leading up to the 5th of April 2023, just 2,000 individuals were responsible for a staggering 37% of all CGT revenues, highlighting a diametric relationship between a few taxpayers and the tax's revenue generation. Many of these individuals realised substantial gains from the sale of unlisted shares, a trend that underscores where the bulk of CGT revenue is derived.

The notion of raising the main CGT rate from its current level - recently increased from 20% to 24% - to align more closely with higher income tax thresholds has been floated within Treasury discussions. However, significant hikes, such as the proposed 39% modelled by officials last year, could inadvertently disincentivise investment and alter individual behaviour significantly.

For many high earners, the potential for a heavier capital gains tax burden may yield a strategic re-evaluation of their investment behaviours, or worse, prompt them to leave the UK entirely and seek tax shelters or alternative jurisdictions.

The concentration of CGT liabilities among a small fraction of the population raises alarms about the efficacy of rate increases. Should the Chancellor implement a larger rise in CGT, it is conceivable that many within this taxpayer bracket may respond by altering their investment strategies, such as delaying sales or withdrawing from the market altogether. The unpredictable nature of such adjustments could ultimately lead to a decline in economic activity, resulting in a net loss of tax revenues rather than the intended financial windfall.

Policymakers must also consider the possible societal
implications of increasing CGT rates!

Many of the individuals affected are business owners who may be contemplating transitions involving the sale of their companies. A burgeoning Capital Gains Tax burden could dramatically affect their decisions, potentially stifling entrepreneurial activities and obstructing new business ventures. This could have a cascading effect, limiting job creation and job security across the economy.

Although the need for increased tax revenue is a pressing concern, a hurried approach could yield unfavourable outcomes. Increasing CGT rates may indeed fill financial gaps in the short term, but such measures risk alienating a vital sector of the economy that plays an essential role in wealth generation and employment.

Balancing the budget should not come at the cost of strangling economic growth.

Until next time ...

HELEN BEAUMONT
Join my mailing list! Click here and be one of the first to know when I publish a new blog post!

Share the blog love ...

Buffer Facebook Twitter Linkedin Pinterest WhatsApp #capitalgainstax #taxratesdebate #cio #economicrecovery #autumnbudget

About Helen Beaumont ...
Helen brings the personal tax planning experience of the top 20 tax companies to Essendon. Formerly of MacIntyre Hudson (with 45 offices nationwide), Helen worked at Chancery for more than 10 years before joining Essendon as the personal tax specialist. Tax Planning can make a considerable difference to your tax liability. Helen has specialist knowledge and experience in tax planning and uses every opportunity to minimise your tax bill is utilised. By analysing your investments, income, profit and expenditures, Helen will provide strategic tax planning expertise that could offer significant savings, whilst delivering clear, honest advice and guidance. When Helen is not at Essendon she spends time with her young son and likes going on long walks with the family dog.

More blog posts for you to enjoy ...
		Why late tax return penalties keep rising as HMRC clamps down Late tax return penalties are rising because more tax goes unpaid, and HMRC is pushing harder. If you're late, the costs can stack up quickly, but you can sometimes challenge mistakes or agree on a payment plan. So always act...
		Can't pay your self-assessment bill by the 31st of January? If you can't pay your self-assessment bill by the 31st of January, don't hide from it. Get the numbers right, pay what you can, and talk to HMRC early about a time to pay arrangement. You'll usually reduce late payment penalt...
		UK tax returns and the mid-year Capital Gains Tax rate change in 2024/25 The mid-year Capital Gains Tax rate change means HMRC's online return may miscalculate CGT after the 30th of October 2024. Taxpayers may need to compute an adjustment and enter it manually. A careful check now can prevent und...
		New Year Nudge: Beat the self-assessment filing deadline without stress Here's the simple reality of the self-assessment filing deadline: it doesn't move, but your stress can. My blog post this week explains why filing early helps, what HMRC charges for delays, and how an online tax return can ke...
		HMRC Taking A Good Look At Savvy Online Sellers HMRC's new data sharing initiative, which aligns with the OECD's global objective to tackle tax evasion, has been met with mixed reactions from online sellers ......
		How HMRC Christmas tax rules trip up festive side hustlers HMRC Christmas tax rules often surprise side hustlers each December. Here's what counts, what doesn't, and when to register. Stay compliant and keep more of your Christmas earnings ......
		Do I need to file a self-assessment tax return? Unsure if you must file a self-assessment tax return? This guide explains who needs to file, what income triggers it, and how to register with HMRC. Get clear before the tax return deadline ......
		Salary sacrifice changes set to hit millions of UK employees Salary sacrifice changes will cap tax-free pension contributions at £2,000 from April 2029. Many employees and employers will face higher costs and new admin. Here's what's changing, who's affected, and how to prepare ......

Other bloggers you may like ...
		Why plain-English IT advice keeps hospitality running smoothly Posted by Andrew Parker on https://blog.wolvertonsolutions.com Here's the thing: plain-English IT advice turns tech noise into calm decisions during a shift. It keeps teams aligned during outages, upgrades and bus ...
		About The Security Of Your Core Business Network Posted by Pritesh Ganatra on https://blog.btsuk.net The roots of technology, especially in the telecommunications industry, go back to 1837 with the introduction of the Morse code telegraph over copper ...
		Chatbots for web designers and marketing agencies Posted by Steffi Lewis on https://www.yourbot.uk If you run a web design studio or a marketing agency, you already know what your clients want. They don't care about tokens, APIs, or the number of la ...
		The real costs of starting a bookkeeping business: Part 1 Posted by Alison Mead on https://blog.siliconbullet.com Here's what you'll actually pay for when you're new. I'll walk through the real costs of starting a bookkeeping business, focusing on the non-negotiab ...