The Labour manifesto has made no mention of Capital Gains Tax, and while Sir Kier Starmer has ruled out many mainstream tax rises he has repeatedly refused to rule out potential CGT increases.
In light of this, James Austen, partner at Collyer Bristow law firm, has given a view on what this might mean in practice and what people should do now to prepare for potential future increases:
He says: “While not one of their manifesto commitments, Labour has not ruled out increasing CGT rates. In fact, Sir Kier Starmer has repeatedly refused to do so when questioned on it during this election campaign, and Rachel Reeves advocated a CGT rate rise in a 2018 pamphlet, so it remains a definite possibility notwithstanding the manifesto’s silence.
“If Labour were to raise the rate of CGT - potentially bringing it into line with income tax (currently, a maximum of 45%) – this could even come as soon as an emergency budget in the first few weeks of the new government.
“Though not a particularly large source of tax revenue, raising CGT rates could nonetheless provide a Labour government with room for additional spending, which would otherwise be difficult to fund given the party’s promise not to raise VAT, National Insurance or income tax.
“Traditionally, CGT rates are fixed for the whole of a tax year, from 6 April in one year until 5 April in the following year. However, there is precedent for an immediate mid-year CGT rate rise: George Osborne did this when increasing CGT from 18% to 28% in 2010.
“As a result, taxpayers with assets standing at a material gain might wish to take advice on triggering disposals of those assets at current tax rates before the election on July 4.”
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