Chancellor John Healey is expected to introduce only a modest increase in Capital Gains Tax (CGT) in the upcoming Budget, according to reports. This move steps back from earlier proposals that would have aligned CGT rates with Income Tax.
The decision follows warnings from market analysts that substantial tax increases could prompt investors to relocate capital abroad. Such a move could potentially impact the UK property market, particularly as buy-to-let yields have reached their highest level since 2011.
Some senior government members had previously advocated for bringing CGT rates in line with Income Tax levels. This would have significantly increased the tax burden on property owners selling investment assets. Currently, the highest CGT rate is 24%, while the top Income Tax rate for higher earners is 45%.
The anticipated limited CGT increase suggests the government is balancing revenue generation with concerns about capital flight and market stability. Property investors and landlords, who have experienced multiple tax changes recently, may view this decision as providing relative certainty for investment planning.