CGT and the budget

phlebas192

FWIW, I would expect that any attempt to reconcile CGT rates with income tax rates would either involve indexing the acquisition costs or increasing the annual allowances with a much greater chance of the former. Indexation wasn't popular when we last had it because it was difficult to obtain the data without professional involvement but it is now trivial.

If you've held an asset for many years then selling pre-budget could prove costly if indexation were to be introduced. Or maybe not. Just don't think it's a one way bet.

aroominyork

https://forums.moneysavingexpert.com/discussion/comment/82144389#Comment_82144389

Both those options would reduce take for the Treasury so, as part of a tax raising measure, I see no reason they would do either. Why do you think otherwise?

zagfles

CGT is an interesting one. I think analysis shows that raising CGT rates won't raise any money because people will sit on assets hoping a future govt will reduce rates. However, a rumour that they will raise CGT rates might well raise a lot of revenue as people look to sell/B&B assets, like OP is considering, to realise gains so they pay CGT now before rates are raised!

So if the govt is going to raise CGT then they need to keep it quiet and hope no-one is expecting them to, but if they aren't going to do anything, then all the speculation that they'll raise rates is very useful for them!

So if you see govt ministers hinting that CGT will be raised, then it probably won't happen, and vv 🤣

subjecttocontract

CGT is paid on other assets such as profit from investment property sales.

zagfles

https://forums.moneysavingexpert.com/discussion/comment/82144592#Comment_82144592

Or they might introduce indexation on assets purchased after the budget date/new tax year. Might be a genius move as it'd encourage people to B&B assets and pay them loads of CGT so they get the benefit of future indexation.

SnowMan

And purely speculating, they could introduce capital gains tax on death relating to the increase in value from purchase to death. That would apply to assets that would have incurred CGT had they been sold just prior to death.

wmb194

Apart from eliminating it altogether there’s not much more scope but another easy option would be to reduce the annual 0% CGT allowance by, say, another £1,000.

If you’re going to rule out increasing the main three taxes - VAT, employee NI and income tax - then pecking us to death is all we’re really left with.

phlebas192

https://forums.moneysavingexpert.com/discussion/comment/82144592#Comment_82144592

Tax revenue from CGT is not a simple "higher rates, lower allowances = higher take" situation. A well designed system does not penalise genuine investment because there will be a lot less of it (hurts growth) and people refuse to realise existing gains if they feel they are being taxed too high (reducing revenue). Bumping up rates to income tax levels with no other measures could well reduce tax revenue.

subjecttocontract

My expectation is that CGT will increase but i won't be taking any action to mitigate losses.

Albermarle

https://forums.moneysavingexpert.com/discussion/comment/82144181#Comment_82144181

In fact there were also similar problems with the 2024 budget with people acting on media speculation. There seems to be less this year, although the DT is starting to run a few scare stories again.