Likely due to lots of people triggering gains ahead of Autumn Budget
Capital gains tax (CGT) receipts were £10.3bn in January, latest figures have showed.
This takes the year-to-date total to £12.1bn, compared to £12.1bn last year and £14.4bn in 2022/23 – the all-time high.
This has been said to likely due to lots of people triggering gains ahead of the Autumn Budget.
Utmost Wealth Solutions global wealth specialist Marc Acheson said this highlights another fiscal revenue stream that is “delivering record sums” to the Treasury.
He said: “The surge in CGT receipts was likely driven by lots of people triggering gains ahead of the Autumn Budget.
“The increase in CGT rates and reduction of the lifetime limits for investors’ relief announced at the Budget are set to drive further increases in CGT totalling around £1.5bn through the rest of this tax-year and 2025/26.’
Quilter financial planning expert Shaun Moore said this marks yet another increase as taxpayers adjust to the harsher tax environment.
“This trend is being driven by two major forces: the reduced annual exempt amount (AEA) and the increase in CGT rates, which came into effect in October 2024,” he explained. “With the AEA now just £3,000, down from £12,300 two years ago, fewer gains escape tax, and more investors are finding themselves liable for CGT—even on relatively modest asset sales.”
Moore noted that chancellor Rachel Reeves’ rise in basic rate CGT from 10% to 18% and higher rate CGT from 20% to 24% has “further squeezed” those looking to cash in on investments.
“As a result, many investors have rushed to sell before the changes fully settle in, pushing receipts higher,” he said.
Further analysis shows that CGT receipts have increased by 271% over the past decade, from £3.91bn in 2013-14 to £14.49bn in 2023-24.
A ‘lucrative source’ Treasury revenue but lowest receipts since 2021
“This dramatic rise highlights how CGT has become an increasingly lucrative source of revenue for the Treasury, with successive governments gradually pulling more taxpayers into its net through lower exemptions and higher rates,” Moore continued.
“However, this wave of disposals may not last. Higher tax rates create an incentive for ‘tax lock-in,’ where individuals hold onto assets rather than triggering a CGT charge. If that happens, the Treasury’s current CGT windfall may prove short-lived.”
Meanwhile, FSL tax analyst Alex Ranahan highlighted that these latest CGT figures were down by £339m compared with January last year and are the lowest January receipts since 2021.
He said that the Office for National Statistics had estimated that the recent changes would bring around 234,000 more people into paying CGT.
“On this morning’s receipts figures, this may not have been successful,” Ranahan said.
He continued: “HMRC themselves note that the January receipts for stamp duty land tax and the annual tax on enveloped dwellings, both property-related taxes, are £2.4bn higher than January last year.
“The question for me is whether CGT receipts for property disposals have similarly gone up, as on this morning’s receipts data it may mean fewer financial assets are being sold.”
Isabel Baxter (Professional Adviser)