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ANNOUNCEMENT: Read more financial articles on our partner site, click here to read more.

Tax experts warn record CGT receipts could ‘leave hole in fiscal plan’

By Beth Brearley, 27 Aug 26

Capital gains tax receipts hit a fresh record of £24.2bn in the 2024/25 tax year

Capital gains tax (CGT) receipts hit a fresh record of £24.2bn in the 2024/25 tax year, up 89% in a year, UK government figures show.

The new high has been partly attributed to the annual CGT allowance being cut from £6,000 to £3,000 in 2024/25, pushing tup the number of people paying CGT by 45% to a record 584,000.

Sarah Coles, head of personal finance at AJ Bell, noted speculation ahead of the Budget in Autumn 2024 also prompted worried investors into realising gains.

“Many of them will have sold assets they would otherwise have realised gradually – taking advantage of the annual allowance – because they were so concerned about potential changes,” she said.

While changes to CGT announced in the Budget hit those on hit those on average incomes particularly hard, Coles says there are issues with calls for an equalisation of the capital gains tax rate and the income tax rate.

“Such a massive hike would almost double the rate for higher and additional rate taxpayers overnight, which makes investing outside ISAs and pensions far less attractive,” she said.

“The government is keen to encourage more people in the UK to invest, so steps that make it less attractive seem counter intuitive.

“There’s also a risk it drives poor investment choices, because people are driven by tax worries. It could encourage many to hoard assets until their income drops or even until death, which could lead them to hang onto investments that don’t suit their needs.”

Shaun Moore, tax and financial planning expert at Quilter said the government needs to “study these figures carefully” when considering this year’s Budget.

“Taxpayers do not sit still and wait for reforms to happen. If significant tax changes are heavily signalled in advance, people will often act before they take effect, accelerating transactions, restructuring investments or bringing forward financial decisions,” he said.

“While that can create a short-term boost in revenues, it can also simply pull activity forward, leaving a weaker pipeline of future transactions and making tax receipts harder to predict. Importantly, many of these decisions cannot easily be reversed.”

Mark Jephcott, senior relationship manager at Utmost, agreed the latest figures cast doubt over the future: “The question for the Treasury is how much activity was brought forward and whether that leaves a quieter period for disposals in the years ahead.”

Elizabeth Bradley, partner at BCLP, warned the “bumper liabilities” could be borrowing from future years, leaving a hole in the medium‑term fiscal plan.

“If today’s exceptional spike reflects forestalling before the 2024 Autumn Budget, the behavioural response to potential CGT rate changes may now shift,” she said.

“Some taxpayers could accelerate disposals ahead of the forthcoming Autumn Statement from the new Chancellor, while others may simply defer gains for years — a pattern seen repeatedly after past CGT reforms. Either way, today’s rise may not translate into stronger receipts for the rest of this Parliament.”

 

Tags: capital gains tax | CGT

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International Adviser covers the global intermediary market that uses cross-border insurance, investments, banking and pension products on behalf of their high-net-worth clients. No news, articles or content may be reproduced in part or in full without express permission of International Adviser.