Rachel Reeves confirms rise in capital gains tax as part of Budget's £40bn tax increase
30 October 2024, 14:51
Rachel Reeves has announced capital gains tax (CGT) will be increased as she delivered Labour’s first budget.
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The Chancellor confirmed the lower rate of the tax will increase from 10% to 18% while the higher rate will also rise from 20% to 24%.
The rates on residential property will remain at 18% and 24%.
CGT is charged on profits which are made from selling assets such as a second home or investments, including shares.
The rates depend on how much you usually pay in income tax, and how large the gain is.
Ms Reeves said: "We need to drive growth, promote entrepreneurship and support wealth creation, while raising the revenue required to fund our public services and restore our public finances."
However, she added: "This means the UK will still have the lowest Capital Gains Tax rate of any European G7 economy."
Ms Reeves also announced that the capital gains tax charged on carried interest would rise to 32% from 28%, saying that the fund management industry provided "a vital contribution to our economy but there needs to be a fairer approach to the way carried interest is taxed."
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The increase in CGT will contribute to a rise in taxes of £40bn as a result of the budget in a bid to fill the "black hole in our public finances" left by the Conservative government, according to the Chancellor.
Discussing the overall rise in taxes, Ms Reeves said: "Any chancellor standing here today would face this reality. And any responsible chancellor would take action.
"That is why, today, I am restoring stability to our public finances and rebuilding our public services."
The Chancellor announced employers' National Insurance contributions are set to rise by 1.2% to 15% from April 2025.
She also said that the level at which employers start paying National Insurance on an employee's salary will fall from £9,100 per year to £5,000.
These changes to National Insurance are set to contribute to £25bn of the £40bn of taxes set to be raised.
