Reeves pockets £197m in capital gains tax as investors rush to sell before the Budget
A record amount of capital gains tax (CGT) was paid last month as landlords and investors rushed to sell up ahead of the Budget.
HM Revenue & Customs (HMRC) pocketed £197m amid growing speculation that Rachel Reeves could align CGT with income tax bands next month.
The figure marked the highest tax take for August since at least 2008.
So far this year, landlords and investors have paid £76m more than in 2023, according to HMRC.
The Chancellor has so far refused to rule out capital gains reforms in the Budget on 30 October.
The looming threat of higher tax bills has driven investors to sell up while rates are still relatively generous, experts said.
An increase in the rate, or cut in the current £3,000 threshold at which it becomes due, would hit second-home owners and landlords, business owners, shareholders and those selling valuable assets.
Duncan Mitchell-Innes, of law firm TWM Solicitors, said: “With many people expecting a rise in capital gains tax, there has been a surge in sales of assets in recent weeks.”
Under the current rules, higher-rate taxpayers are charged 24pc on profits made from the sale of second properties and 20pc for other assets. Basic rate taxpayers pay 18pc and 10pc respectively.
Numerous think tanks have urged Labour to close the gap between tax charged on earned and “unearned” income, including the influential left-leaning Resolution Foundation which has previously called the lower rates “unjustifiable”.
If capital gains tax were aligned with income tax rates, then a higher rate taxpayer sitting on a £50,000 profit from shares would see their tax bill double from £9,400 to £18,800.
Analysis revealed earlier this week that landlords looking to sell properties they bought before 2005 would have to pay £90,000 under a reformed system, up from an average of £54,000 today.
The Chancellor has hinted that tax rises are needed to fix a £22bn black hole in the public finances. Her vow to protect “working people” from higher tax bills has fuelled speculation that capital gains tax will be targeted in the autumn budget.
Helen Morrissey, of stockbroker Hargreaves Lansdown, said: “As we brace for the upcoming Budget next month, we know that the likelihood of any hikes to income tax or National Insurance is extremely low – Labour ruled out making such changes in its election manifesto though it’s clear the axe will need to fall somewhere – capital gains tax seems a very likely candidate.”
Tax advisers have reported a surge in inquiries from middle-class investors panicking about the risk of higher capital gains tax bills.
A spokesman for the Treasury said: “We do not comment on speculation around tax changes outside of fiscal events.”
