Raise capital gains tax rates

Policy baseline

The Budget raised main CGT rates to 18 and 24 percent and lifted relief rates in stages. Timing responses make receipts volatile.

• Applies to taxable asset disposals.
• Business disposal relief changes phase in.
• Lock-in can cut short-run receipts.

Core trade-offs

The direct beneficiaries are taxpayers funding public services. The costs fall mainly on asset owners and some entrepreneurs. The main economic question is realisation behaviour can undermine receipts.

• Taxpayers funding public services gain most directly.
• Costs fall mainly on asset owners and some entrepreneurs.
• Key risk: realisation behaviour can undermine receipts.

Fiscal impact by 2028-29

-GBP 4.0bn to +GBP 0.5bn. Central estimate: -GBP 2.0bn.

• Positive numbers mean net fiscal cost; negative numbers mean Exchequer savings.
• Main channel is the scored tax, spending or delivery change.
• Offsets depend on tax receipts, behaviour and pass-through.
• Range reflects uncertain implementation and economic response.
• This is not an official costing.

Economic impact by 2028-29

• Jobs: Little direct job effect; sector-specific taxes can reduce hiring in affected industries.
• Wages: Legal taxpayers may shift costs to workers, owners or consumers over time.
• Prices: Some pass-through likely where market power or fixed demand exists.
• GDP / productivity: Usually mildly negative before spending use; stronger if investment or mobility responses rise.

Assessment

This is a real trade-off, not a free gain. Taxpayers funding public services benefit, while asset owners and some entrepreneurs bear most costs. Overall output depends on behaviour, capacity and pass-through.

Confidence: Medium-low. Higher on the policy target and fiscal channel; lower on behaviour, pass-through and economy-wide effects.

Main risks

• Behavioural response: Avoidance, timing and relocation can reduce receipts.
• Incidence uncertainty: Legal taxpayers may shift costs to workers, consumers or investors.
• Investment risk: Higher taxes can reduce investment where returns are mobile.

Safeguards

• Use HMRC microsimulation before legislating.
• Close avoidance routes before rate rises.
• Review receipts and investment annually.

Academic evidence

UK government evidence

Sources

• PolicyLens illustrative scenario methodology for raise capital gains tax rates Internal - PolicyLens, 2026
• Autumn Budget 2024 policy costings UK government costing - HM Treasury, 2024
• Direct effects of illustrative tax changes Tax statistics - HMRC, 2025
• Tax by Design Academic review - Mirrlees and review team, Institute for Fiscal Studies, 2011
• Economic and fiscal outlook October 2024 UK fiscal forecast - Office for Budget Responsibility, 2024
• The Elasticity of Taxable Income with Respect to Marginal Tax Rates Academic article - Saez, Slemrod and Giertz, Journal of Economic Literature, 2012
• Change: Labour Party Manifesto 2024 Party policy source - Labour Party, 2024

Other Labour policies

• Raise employer National Insurance
• Apply VAT to private school fees
• Replace non-dom tax status
• Extend the Energy Profits Levy
• Capitalise the National Wealth Fund
• Capitalise Great British Energy
• Expand the Warm Homes Plan
• Move renewables charges to tax