The warnings of a tough Budget in October, issued yesterday by Prime Minister Sir Kier Starmer, have given. Renewed strength to fears of Capital Gains Tax being tightened on landlords.
At the moment CGT is imposed on the profit from the sale of capital assets, including investment or second homes, shares, business assets and most personal possessions worth £6,000 or more, apart from cars.
Currently, people do not have to pay tax on the first £3,000 of profits, or £1,500 for trusts.
The minimum limit could be removed and the tax could be imposed on assets currently exempt.
In recent years there has always been speculation about potential increases to CGT rates, possibly to bring them in line with the higher rate of incomes tax at 40%. A higher rate of CGT has already applied to the disposal of residential properties since 2016; for some years it was 28% but then dropped to 24% at the end of the Conservative government.
Starmer made clear yesterday that the Budget in October is “going to be painful”, adding he has no other choice and those with the broadest shouldest “should bear the heavier burden.” He says his government has inherited a £22 billion black hole in the nation’s finances.
Starmer spoke from the Downing Street rose garden, and made clear that was to demonstrate the difference with his immediate predecessors. He said it was once used for parties during lockdown, but now is again being used for public service
Asked directly possible CGT increases by a US TV news show earlier this month, Chancellor Rachel Reeves chose not to rule them out, saying: “Of course you need to bring in the revenue to fund the vital public services but we’ve also got to grow the economy and I won’t do anything that makes it harder to achieve that economic growth and prosperity.”
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