The British government is set to increase the capital gains tax (CGT) on share sales in its forthcoming budget, scheduled for October 30, The Times has reported. The CGT hike, expected to be several percentage points, comes as part of Labour’s efforts to address the nation's fiscal deficit while maintaining key public services.
Although the report did not cite specific sources, it suggests that while CGT on shares will see a significant rise, taxes on the sale of second homes will remain untouched. Additionally, the government is likely to cut certain reliefs within the capital gains tax regime to generate additional revenue.
The financial markets are watching closely to see how the Labour government, in its first budget since winning the July election, plans to balance the need for increased public investment with efforts to stabilise the country’s finances.
Earlier reports suggested that Chancellor Rachel Reeves is considering a combination of tax hikes and spending cuts totaling £40 billion. The proposed measures aim to stabilize the fiscal situation, which Labour claims was severely weakened by the previous government.
Currently, the capital gains tax rate for high earners ranges from 20% to 28%, depending on the type of asset being sold. The rate for share sales is 20% for those with higher incomes. Despite previous speculation of a more dramatic increase—up to 39%—Prime Minister Keir Starmer dismissed those claims earlier this week, labeling them unfounded.
As the budget date nears, the prospect of higher taxes on share sales is causing concern among investors. Any significant rise in capital gains taxes could impact stock market activity and portfolio strategies, especially for higher-income taxpayers who will be directly affected by the increase.
