Chancellor Rishi Sunak has been looking for ways to cover the costs of the devastating financial impact caused by the coronavirus pandemic. The UK’s economy has been hit hard during the pandemic and the government are now looking for ways to gain back funds.
Rishi Sunak has reassured the nation that there will not be a ‘horror show of tax rises with no end in sight’ however, after a government review one of the areas where taxes could increase is capital gains tax.
Capital gains tax is the tax paid on the profit made when selling an asset that has increased in value. The amount gained from the sale is taxed not the entire amount received, for example, if a second home was sold for £220,000 when it was purchased for £200,000 then the profits of £20,000 would be subject to capital gains tax.
Capital gains tax currently stands at 10% for basic rate taxpayers and 20% for higher rate taxpayers. This could however, be doubled and brought in line with income tax rates. Income tax rates are currently 20% for basic rate taxpayers and 40% for higher rate taxpayers.
Currently the first £12,300 of capital gains is exempt however, there have been reports that the government are looking at cutting exemptions.
There have been no official announcements on whether capital gains tax will increase. Any future announcements will be posted on our page.