This week, Rachel Reeves has ruled out a Labour government increasing rates for income tax, national insurance and VAT.
An incoming Labour government will need to increase taxation to fund their spending plans.
According to press reports this week, Rachel Reeves has come under pressure from colleagues to raise the rates of CGT.
Current rates of CGT are 10% for gains falling within a taxpayer’s basic rate band of tax, and 20% for gains falling within a taxpayer’s higher and additional rate bands of tax. There is an additional surcharge of 8% for gains on residential property.
An option for a Labour Government would be to go back to the position before Gordon Brown reduced CGT rates in 1998 of CGT being taxed at your marginal rate of income tax.
CGT would therefore increase to 20% for basic rate taxpayers, 40% for higher rate taxpayers, and 45% for additional rate taxpayers.
These increases could be introduced without the restoration of indexation allowance that used to relieve the high rates of CGT prior to 1998.
If you are going to be selling chargeable assets that will realise a gain, you may want to consider ensuring that you sell them before the likely Budget that an incoming government will present shortly after their election.
Contact us to discuss any CGT issues you may have.
