Capital gains tax bill reaches record level

Official figures have revealed that the Government collected a record £8.8 billion in capital gains tax (CGT) during the last tax year.

Over 281,000 people are now paying CGT, with the total chargeable gains reaching £57.9 billion during 2017-18.

The increases follow a consistent trend during the last four years, with the Treasury continuing to raise substantial levels of tax from CGT.

The £8.8 billion collected during the previous tax year represents an increase of 14 per cent on the previous year’s total of £7.74 billion.

The figures from HMRC revealed that the number of CGT taxpayers increased by 3 per cent to 281,000, following previous trends which have displayed increases since 2013/14. This is partly due to a reduction in the main CGT rates from 18 and 28 per cent to 10 and 20 per cent respectively.

Most CGT revenue comes from a relatively small number of taxpayers who make the largest gains. During 2017-18, 62 per cent of CGT came from those who made gains of £1m or more. This group generally accounts for around 3 per cent of CGT taxpayers each year.

Around 13 per cent of income tax-paying individuals were higher rate taxpayers during 2017/18, whereas 31 per cent of CGT liable individuals had a taxable income of between £33,500 and £150,000, with 12 per cent of CGT liable individuals having a total taxable income of above £150,000.

It is thought that the increase in CGT receipts from the number of taxpayers selling interests in businesses and claiming entrepreneurs’ relief perhaps signals continued investor appetite in UK enterprises, in spite of Brexit uncertainty.

Which will mean the new Chancellor faces a challenge to negotiate the UK through Brexit in a way that maintains strong asset values that supports the UK economy, incentivises UK entrepreneurs and ensures a CGT rate that encourages transactions on which CGT is ultimately paid.

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