Are we going back to the future for CGT?
Newsletter issue – September 2024
In 1989, Conservative Chancellor Nigel Lawson decided to change the rules around Capital Gains Tax so that it was applied at whatever the taxpayer's marginal rate was.
It remained that way all the way through to 2008. Since that point it has been tinkered with various times – by both Labour and Conservative Chancellors - going down and then up again.
It seems that we may soon be returning to the policy of 1989 - or some variation of it - when Rachel Reeves announces her Spring Budget on 30 October. At least that's what some commentators and analysts are expecting.
Ms Reeves has been quoted in the last 12 months saying there were no plans to raise CGT, but there was virtually no mention of it in the official Labour manifesto, suggesting it could be one option to plug the so-called £22bn blackhole that Ms Reeves claimed the new Government had uncovered. There are not a huge number of options, given that she has ruled out Income Tax, NI and VAT rises.
If the rules for CGT are changed, it's unlikely that it will kick in until April 2025 but it could still change sooner than that. Some analysts have suggested that other measures to bring in tax could include reducing Business Asset Disposal Relief.
If you need any assistance understanding the current CGT rules or adapting to any changes when they are announced later this year, please contact our team.