Kinnock calls for Capital Gains Tax overhaul ahead of Autumn Budget
Former Labour leader Lord Kinnock has urged the Government to use this autumn’s Budget to align Capital Gains Tax (CGT) rates with Income Tax, arguing the move could generate an additional £12 billion for the Treasury.
The comments come ahead of the Government’s first Budget on 28 October, where Chancellor John Healey is widely expected to announce measures aimed at increasing tax revenues.
Under the current system, Capital Gains Tax is charged at 18% for basic-rate taxpayers and 24% for higher and additional-rate taxpayers on most residential property gains. By contrast, Income Tax is levied at 20%, 40% and 45%.
Speaking to the i Paper, Lord Kinnock said the Government should recognise “the utility and the encouragement which the further £12bn revenues that such a fair change in CGT would bring.”
Although no formal policy has been announced, speculation continues that Capital Gains Tax could once again become a target for reform as the Government looks to balance the public finances.
Any increase would have implications for individuals disposing of investment portfolios, second homes, buy-to-let properties, business interests and other chargeable assets. For many families, the overall tax burden on accumulated wealth could increase significantly when Capital Gains Tax is considered alongside Inheritance Tax.
Professional advisers have therefore renewed calls for individuals to review their succession planning, ownership structures and long-term wealth strategies before any changes are announced.
The iTrust View
Whether these proposals ultimately become Government policy is almost secondary. The important point is that tax legislation is constantly evolving, and waiting until after a Budget has been delivered often leaves families with fewer planning opportunities.
Too many people view estate planning solely through the lens of Inheritance Tax, yet Capital Gains Tax can be equally significant when wealth is transferred, properties are sold, or family assets are restructured. Effective planning considers both taxes together rather than in isolation.
Families should resist making hurried decisions based on speculation, but equally they should not ignore the direction of travel. A proactive review of existing wills, trust arrangements, asset ownership and succession plans can often identify opportunities to improve flexibility, preserve family wealth and place future generations in a stronger position, whatever the Chancellor ultimately announces.
Good estate planning is not about predicting the next Budget. It is about ensuring your affairs remain robust regardless of what changes Parliament chooses to make.
James Berkeley
Senior Counsel