Another think tank has warned Chancellor John Healey against hiking Capital Gains Tax (CGT).
Although Healey is reported to have ruled out aligning CGT with Income Tax in next week’s Budget, it is now considered possible that he may left the CGT rate.
The Centre for Policy Studies (CPS), a right-leaning think tank, cites HMRC calculations that increasing the current higher rate of CGT by 10 points would reduce revenue by £3.6 billion after three years.
This would be because a small number of taxpayers account for most CGT receipts and many would hold on to their assets rather than sell.
The Centre says the UK ranks 30th out of 38 OECD countries for the competitiveness of its tax system, according to the 2026 edition of the International Tax Competitiveness Index, published this week.
The CPS claims the introduction of a new, separate wealth tax would mean the UK fell to 35th in the overall tax competitiveness league and be the worst OECD country for its property taxation regime; and raising the higher rate of Capital Gains Tax to 45%, from its current rate of 24%, would see Britain fall to 32nd overall – and is likely to cost the Treasury money.
Meanwhile a 45% income tax rate would make the UK’s CGT rate the highest in the OECD, above Denmark’s 42%.
Introducing any form of wealth tax would also damage the UK’s international standing.
Only four OECD countries have a full wealth tax and three have a partial one. And the CPS claims wealth taxes have been shown to discourage investment and entrepreneurship, and raise little revenue.
In Spain, a wealth tax raised just 0.21% of GDP.
A CPS spokesperson adds: ‘Rather than paying any attention to fiscal discipline, the Chancellor is likely to use his upcoming Budget to raise taxes in a bid to fund Labour’s ever-growing spending pledges.
‘The UK already has a tax system which does little to encourage growth and the options mooted would cause further damage to the economy, and our international standing.’
This article is taken from Landlord Today