Property investors could face a substantial increase in their tax bills, with proposals suggesting capital gains tax (CGT) could rise to as much as 45%. The government is reportedly considering aligning CGT more closely with income tax ahead of next month’s Budget.
The proposal, put forward by Labour donor and Ecotricity founder Dale Vince, suggests using additional CGT receipts to raise the income tax personal allowance from £12,570 to £15,570. This move is estimated to generate around £14bn, although the government has not yet announced a decision.
Jessica Partridge, partner and head of tax and trusts at Mayo Wynne Baxter, warned that higher rates might not automatically lead to substantially more revenue. She stated that aligning CGT with income tax would be a fundamental change, primarily affecting investors, entrepreneurs, and business owners.
Partridge added that higher rates could influence when investors choose to sell assets, potentially leading them to delay disposals, retain assets for longer, or restructure their affairs to reduce tax exposure. This could impact the number and timing of investment property sales.