Labour CGT Hike Speculation Rises After Aide's Post
Sir Keir Starmer's chief of staff, Morgan McSweeney, “liked" a social media post suggesting that raising capital gains tax would be politically wise for Labour, fuelling yet further speculation that Labour are considering increasing this tax if they win the election. Despite later removing the "like" and saying it was a mistake, the incident has only intensified rumours of CGT hikes further given Labour’s ongoing refusal to rule out CGT rises.
Labour's Capital Gains Tax Hike Could Cost Treasury £3bn
Increasing capital gains tax under a Labour government could actually decrease Treasury receipts, according to HMRC data. A 10-percentage point rise in the higher rate might lead to a £170m reduction in 2024-25, with further declines in subsequent years. Labour has ruled out income tax and National Insurance hikes but has not made the same pledge for capital gains tax, sparking speculation. The Liberal Democrats propose doubling rates for higher earners, aiming to raise £5.2bn annually for the NHS by 2028-29. Predicting capital gains tax revenue is challenging, as large increases can reduce yield due to taxpayer behaviour. Historical data and expert analysis indicate that significant rate hikes can lead to decreased revenue, as individuals may alter their asset management strategies to avoid higher taxes. Current projections show capital gains tax revenue rising due to higher asset prices and reduced tax-free allowances, with expected revenues of £15.2bn this year and £18.9bn by 2026-27.
Labour's Jonathan Ashworth Fuels Capital Gains Tax Hike Concerns
Labour's shadow Paymaster General, Jonathan Ashworth, has sparked concern among business owners by refusing to rule out potential increases in capital gains tax (CGT). During discussions on Labour's fiscal plans, Ashworth assured that income tax, National Insurance, and VAT would not see hikes, emphasizing transparency in funding commitments. However, his ambiguity regarding CGT raises uncertainty, contrasting Labour's pledge for clarity with business owner's concerns. Shadow Defence Secretary John Healey's similar stance on property tax adds to the unease, highlighting potential impacts on business strategies amid Labour's evolving economic policies.
Lib Dems Propose Doubling Capital Gains Tax for NHS Funding
The Liberal Democrats manifesto has proposed a substantial increase in capital gains tax (CGT) for top earners, aiming to raise the highest rate to 45% to fund a £5 billion annual NHS rescue package. This move could dramatically affect business owners, with examples showing potential tax bills nearly doubling for those selling shares in businesses or properties. While the party argues that only the wealthiest would be impacted, they plan to adjust thresholds and introduce allowances to protect lower-income earners. However, concerns remain about the broader negative impact on business investment and economic growth, suggesting significant challenges ahead if such proposals were enacted.
How Can Qubic Help?
To navigate these potential changes, Qubic offers tailored tax planning services. Our expertise can help mitigate the impact of higher taxes and leverage current reliefs effectively. The window of opportunity to leverage current tax rates and reliefs is narrowing, and the time to act is now.
We understand that the uncertainty surrounding tax changes can be challenging, and we are here to help you.
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