Wealthy individuals in the UK are reportedly selling assets like shares and property in anticipation of potential capital gains tax (CGT) increases under a future Labour government, according to several wealth managers. Despite Labour’s shadow chancellor Rachel Reeves stating there are no plans to raise CGT, she has not ruled out increases during a full term in office.
Financial planners report that some clients, including corporate executives and entrepreneurs, are already divesting investments. The current CGT rate for higher or additional-rate taxpayers is 20% on most assets, with property taxed up to 24%.
Toby Tallon from Evelyn Partners noted that some clients with near-term cash needs are selling assets now, while others are waiting for election results. Nick Ritchie of RBC Wealth Management mentioned a “general nervousness” about CGT’s future, with some clients selling assets to lock in the current 20% rate.
There are concerns that a significant CGT increase could lead to wealthy individuals moving overseas, potentially causing a “brain drain” of job creators and taxpayers.
While Labour has committed to not raising taxes on “working people,” including national insurance, income tax, or VAT, they have not ruled out changes to other taxes like CGT. The Conservative party has pledged not to increase CGT.
Ian Cook from Quilter Cheviot noted that buy-to-let owners, especially those with multiple properties, are actively selling. Some wealth managers warn that CGT increases could discourage investment in the UK economy.
Labour maintains that their plans do not require additional tax increases and that they have set out fully costed, funded plans with specific tax loopholes to close. They emphasize that their focus is on economic growth and improving the financial situation of working people rather than raising taxes.
