(qlmbusinessnews.com Fri. 11th Oct, 2024) London, UK —
Treasury Scrambles as Rachel Reeves Considers Capital Gains Tax Rise to 39%
Chancellor Rachel Reeves is reportedly considering increasing the capital gains tax (CGT) rate to as high as 39% in the upcoming Budget, as the Treasury scrambles to plug a significant funding gap in public services. Treasury models, seen by sources and revealed by *The Guardian*, suggest officials are testing a range of 33% to 39% for the tax, which is currently levied on the sale of assets such as second homes and shares.
The CGT, a wealth tax paid by approximately 350,000 individuals, is currently charged at significantly lower rates than income tax on wages. The potential rise is aimed at addressing a fiscal shortfall, which the Institute for Fiscal Studies (IFS) estimates could be as high as £25bn. However, concerns are mounting within Whitehall over the limited options for raising taxes without breaking Labour's pledge to protect working people from higher taxes.
The Treasury has denied any internal disarray, but insiders suggest that key tax decisions are being left until the last minute. While Reeves has ruled out increasing income tax or National Insurance, alternative wealth taxes have hit stumbling blocks. Plans to target non-domiciled residents and private equity executives are under review due to fears that they may not generate the expected revenue, or worse, could prompt the wealthy to relocate overseas.
Sources have warned that the Treasury’s plans to increase CGT and inheritance tax (IHT) are also uncertain, as officials race to prepare their projections for the Office for Budget Responsibility (OBR). Reeves is reportedly considering a CGT hike to 33-39% on second homes and other assets, but it remains unclear how much this would raise.
IFS figures show that while only a small number of people pay CGT, it still generates around £15bn in annual tax revenue. The current CGT rates range from 18% to 28%, with wealth managers already reporting a surge in asset sales ahead of the Budget as investors seek to avoid any impending hikes.
Economists, however, have cautioned that simply raising CGT without a broader reform could fail to generate long-term benefits. A senior IFS economist warned that the government should focus on creating a stable and predictable tax system to avoid discouraging investment.
Despite the speculation, a Treasury spokesperson has reiterated that no specific tax measures have been confirmed and that ongoing modelling is being considered ahead of the Budget later this month.
This News Story is brought to you by QLM Business News, your Digital Media Channel
Visit QLM businessnews.com
For more business news stories also follow us on Facebook, X and Youtube.
To Help qlm business news bring you more new stories like this, please like, share and subscribe.
Unlock unparalleled business growth and effortlessly attract a stream of new customers through QLM Business News Sponsored Advertising. Elevate your brand's presence and captivate your target audience with precision. Visit QLMbusinessnews.com and click on “Advertise” to harness the power of strategic advertising. Don't miss this unparalleled opportunity to propel your business to new heights of success!
Disclaimer: All images presented herein are intended solely for illustrative purposes and may not accurately depict the true likeness of the subjects, objects, or individuals referencted in the accompanying news stories.
