On October 30, British Finance Minister Rachel Reeves disclosed an increase in capital gains tax rates for assets such as equities and cryptocurrencies.
Expected to generate approximately £2.5 billion, the lesser rate will increase from 10% to 18%, and the higher rate will increase from 20% to 24%. This ensures that capital gains tax is consistent with the current rates of 18% and 24% for property transactions.
According to Reeves, the objective of the modifications is to maintain the UK’s capital gains tax rates as the lowest among the European G7 countries, while simultaneously stimulate growth and bolster public services. Profits exceeding £3,000 from asset transactions are subject to capital gains tax, with rates determined by income tax brackets.
Furthermore, the carried interest tax for fund administrators will rise from 28% to 32%. The Business Asset Disposal Relief for entrepreneurs will remain at a 10% rate and a lifetime limit of £1 million for the time being. However, it will increase to 14% in April 2025 and 18% in 2026-27.
By the conclusion of the forecast period, the Office for Budget Responsibility (OBR) anticipates that these reforms will generate an additional £2.5 billion. Last year, capital gains tax generated £15 billion, which accounted for approximately 4% of the total income tax revenue raised.
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