Key Takeaways
- Capital gains tax rates were raised in 2024 but aligning them with income tax rates could see CGT rise from 24% to 45%.
- Analysts say investors may already have brought forward asset sales ahead of any changes.
- Some forecasts suggest raising CGT rates could bring in an extra £26 billion a year, while others point to a much lower figure.
Speculation is mounting among personal finance analysts that the upcoming Autumn Budget on Oct. 28 could see a significant rise in capital gains tax rates. This comes at a time when the fiscal position of the government is increasingly tight, with borrowing higher than forecast in August and gilt yields still elevated.
As chancellor, Rachel Reeves increased CGT rates in 2024, but if CGT is raised in line with income tax, that could mean higher or additional rate taxpayers paying 40% and 45% on the sale of assets, versus 24% now.
While the tax raised £22 billion a year in 2024/2025, there is no consensus on how much hiking the tax will actually raise for the government. Researchers at the Centre for the Analysis of Taxation, a tie-up between the University of Warwick and the London School of Economics, say that doing so could raise an extra £26 billion a year. But they also say that without proper reforms to prevent avoidance, the windfall could be much smaller.
The Institute for Fiscal Studies, an influential think tank that describes the current regime as “flawed,” says that just increasing the headline CGT rates will raise much less money than expected, and could even lose the government money.
“Higher rates would increase unwelcome distortions to commercial decisions about how much to save and invest, which assets to choose and how long to hold them for,” they wrote in a paper.
What Is Capital Gains Tax?
CGT is due when an individual sells an asset worth more than £6,000 for a profit, after the £3,000 allowance has been used up.
Assets subject to CGT include second homes, shares in a company, and cryptocurrency.
Investors can shield assets from CGT in ISAs and pensions, as well as buy buying and selling UK government bonds.
Less than 1% of UK adults pay the tax in any financial year, but the tax brings in £22 billion a year.
Will Investors Sell Before the Autumn Budget?
Government receipts for CGT have been rising over time as asset prices rise, but there may be signs of the trend slowing.
The government took £198 million in CGT in August 2026, a £8 million increase on August 2025 figures. But since April this year, the start of the new tax year, the Treasury has taken less in CGT than in it did the year before, a total of £914 million.
As in previous years when increases to CGT have been rumored or announced, there has been considerable pushback from the UK personal finance industry: one commentator described the 2024 CGT rise as a “bitter blow for investors”, while another warned that hiking CGT would “deter consumers from investing in growth assets.”
This time around, industry figures warn a sharp increase in tax rates could be counterproductive.
Susannah Streeter, chief investment strategist at Wealth Club, says that any changes to tax incentives tend to change people’s behavior, limiting the revenue the government can expect to bring in.
“For investors, the prospect of a higher CGT bill could mean some simply decide not to sell assets and hang onto them instead,” she says.
AJ Bell’s head of markets, Dan Coatsworth, says the rumors may have already prompted a change in behavior.
“Speculation that capital gains tax rates could rise at the Budget may encourage some investors to bring forward plans to sell investments held outside ISAs and pensions,” he says.
He also says the timing of any announced changes could be problematic.
“CGT rate increases, if implemented, could come into force immediately, creating a change midway through the tax year. That’s what happened when rates increased in 2024, causing a headache for investors. Some will choose to act before the Budget as a result,” he adds.
What Options Do Investors Have if Capital Gains Tax Rises?
Coatsworth says the focus of these changes will be most keenly felt on dealing accounts, which are often held alongside ISAs and SIPPs to buy and sell individual UK stocks.
“Certain investors might treat the CGT rate change speculation as a reason to reappraise their existing dealing account holdings and potentially cash out with a view to redeploying the proceeds elsewhere,” he says.
Investors may be tempted “to get out while the going is good,” he says, or just hold on and hope strong stock market returns limit the tax impact over time.
The ISA and pension regime is still—for now—an attractive framework, some say.
To shield the impact of any future changes to CGT, it’s worth considering using the existing tax-free options such as ISAs and pensions first, says Julia Cox, partner at law firm Charles Russell Speechlys.
“Maximizing these investment routes is one way to keep CGT minimal,” she says. The only caveat is that pensions will come into the inheritance tax regime from 2027 under changes announced in the Autumn Budget in 2024.
Investors planning to leave the country to escape paying capital gains tax altogether should beware: The IFS has proposed an “exit tax” for wealthy individuals.
