“If you increase CGT, investors will potentially just sit tight, ironically denying the Government of not simply the extra revenue it hopes to gain from the higher tax rate, but also the revenue it currently collects.
“For those sitting on large potential capital gains, they may choose to realise them now while they know what the tax rates are. CGT is a complex area it’s worth taking advice.”
On this, new analysis from Growthdeck revealed Londoners are set to be affected by this the most as taxpayers in the capital pay 29 percent of all the UK’s Capital Gains Tax despite having just 13 percent of the UK’s population.
In analysing data from HMRC, Growthdeck found that people in London paid £2.5bn in CGT last year, up 24 percent from £2.1billion the year before.
Within London, the wealthy borough of Kensington & Chelsea is the UK’s CGT hotspot, ranking first out of 374 areas of the UK for capital gains tax.
The borough’s taxpayers paid £516million in CGT last year – 6 percent of the entire country’s CGT bill, despite being only 0.2 percent of the total population.
Gary Robins, the Head of Business Development at Growthdeck, commented on the findings: “For over £500million of CGT to be paid a year in Kensington & Chelsea is astonishing.
“That’s less than five square miles of central London.”
“The Government’s take from CGT rises virtually every year, and its taxpayers in London that are carrying a huge amount of that burden.”
On top of aligning CGT with income tax, the OTS’s proposals also looked into:
- CGT annual exempt amounts
- Interactions between CGT, lifetime gifts and Inheritance Tax and
- Business reliefs