• Total capital gains tax paid rose to £9.5bn
• …but individuals paying it reduced by 4%
• Tax take represents average rate of 15%
Laura Suter, personal finance analyst at investment platform AJ Bell, comments on the latest figures on Capital Gains Tax:
“All eyes will be on how much the Government is making in Capital Gains Tax after Chancellor Rishi Sunak announced a review of the tax ahead of his spending review later this year. Many are expecting a crackdown on CGT reliefs and allowances or a raising of the rates, or both, as the Government scrambles to fill the large holes in its finances brought about by the Covid-19 crisis.
“The latest figures show that the amount the Government took in CGT rose by 6% between 2017/18 and 2018/19, with the British public paying £9.5bn. But this figure has jumped more than a third during the past five years.
“Despite this, fewer people paid CGT in the most recent data when compared to the previous year. In total 276,000 people paid the tax in 2018/19, a drop of 4% on the previous year. This represents few than 1% of the total people paying income tax. This points to the fact that the Government may decide to bring more people into the CGT net, meaning more individuals pay the tax, or align the CGT rates with income tax.
“Another area that may pique the Government’s interest is the level of gains versus the actual tax take after all allowances and reliefs are taken into account. There were £62.8bn of total gains made by individuals in 2018/19 but only £9.5bn of tax taken, representing an average tax rate of 15%.
“It was suggested that Entrepreneurs Relief might be slashed in previous Budgets. The latest figures show that the total gains eligible for the relief has more than doubled over the past eight years, meaning it could come under more scrutiny. The Government has already restricted the lifetime limit from £10m to £1m but more cuts could be on the cards.”
