Can Capital Gains Tax rate increase mid tax year?

TheHemulen

As Labour refused to deny that it would increase CGT and assuming the worst come the first Labour Budget.. Could they increase the rate applicable with immediate effect straight after the budget and if so would the rate then be different for sales pre and post rise?
This will be the first year I'll need to do a tax return so I've not had experience of this but I gather you pay CGT at the end of the year on all gains over the threshold. If the rate is different at points of the year is it possible to get different sales taxed at different rates on one return?
I've tried Googling this but can't get any results for mid year increases so perhaps this just doesn't happen.

gravel_2

Likely no changes until April 2025.

EthicsGradient

Changing a rate in the middle of a tax year would be incredibly complicated. You'd have to effectively do 2 calculations of consolidated capital gains, rather than one, and that then brings up questions of how yearly allowances are split, where losses are put, and so on. No, I don't think any government has ever attempted that before. 

Hoenir

Rather than wasting your time Googling or reading conspiracy theories on social media wait until the Autumn statement.  

ChilliBob

Pretty sure this doesn't happen. But I suppose it can't 100% be rulled out. I think it's one of those 99.9% likely it won't situations.

What I find interesting is what impact this will have?

* Will people just sit on their gains waiting for a drop in a subsequent government (how long!)
* Will people sell up their CGT assets (e.g shares, property)
* Will they seek out investment choices that have better tax treatment but are more niche and risky? Eg vcts?

Me personally, I don't think I'll do anything different. I'll sell some stuff to make use of the 3k allowance but other than that I think I'll stay put and snowball any gains. 

zagfles

EthicsGradient said:

Changing a rate in the middle of a tax year would be incredibly complicated. You'd have to effectively do 2 calculations of consolidated capital gains, rather than one, and that then brings up questions of how yearly allowances are split, where losses are put, and so on. No, I don't think any government has ever attempted that before. 

It would be complicated but easily possible, there would have to be rules about splitting the allowance, losses offsets etc, but it would be nowhere as complicated as for instance aligning the pension input period with the tax year which was done mid tax year. 

The alternative of announcing a significant rise in advance to apply at the start of the next tax year would be crackers as everyone with a gain would just realise it/B&B it to pay tax at the lower rate while they still can.  

Phoenix72

It has happened before - in 2010 it increased from 18% to 28% wef 23 June 2010

ColdIron

zagfles said:

EthicsGradient said:

Changing a rate in the middle of a tax year would be incredibly complicated. You'd have to effectively do 2 calculations of consolidated capital gains, rather than one, and that then brings up questions of how yearly allowances are split, where losses are put, and so on. No, I don't think any government has ever attempted that before. 

It would be complicated but easily possible, there would have to be rules about splitting the allowance, losses offsets etc, but it would be nowhere as complicated as for instance aligning the pension input period with the tax year which was done mid tax year.

But of course the realigning of the PIP was achieved by effectively increasing the allowance, giving some a double bite over the transitional period. Many would welcome such a mechanism to overcome the difficulty

The alternative of announcing a significant rise in advance to apply at the start of the next tax year would be crackers as everyone with a gain would just realise it/B&B it to pay tax at the lower rate while they still can.

Which is what happens with any change, such as the reductions of the Annual Exempt Amount, it's factored in. The prize is not stinging a few people for a few months, but the perceived increased tax take over coming years

aroominyork

It would look like a knee-jerk punishment and I don't think that is the message Reeves wants to be giving out. It feels very unlikely (famous last words...).

nottsphil

Hoenir said:

Rather than wasting your time Googling or reading conspiracy theories on social media wait until the Autumn statement.  

It's hardly wasting time trying to ascertain how a gain would be taxed this year.  Maybe the OP doesn't want to buy thousands of pounds worth of short dated gilts only to find that they are suddenly accessible for Capital Gains Tax this year.

masonic

TheHemulen said:

As Labour refused to deny that it would increase CGT and assuming the worst come the first Labour Budget.. Could they increase the rate applicable with immediate effect straight after the budget and if so would the rate then be different for sales pre and post rise?
This will be the first year I'll need to do a tax return so I've not had experience of this but I gather you pay CGT at the end of the year on all gains over the threshold. If the rate is different at points of the year is it possible to get different sales taxed at different rates on one return?
I've tried Googling this but can't get any results for mid year increases so perhaps this just doesn't happen.

Parliament is sovereign, so anything that is technically feasible could be done. It would be possible for them to change it retrospectively for the whole of this tax year if they wished. They could pass legislation that cats are dogs. But it is not something that is even remotely likely IMHO.