Rachel Reeves’ capital features tax raid to backfire leaving £23bn gap | Politics | News | EUROtoday

The price range watchdog has warned the Chancellor’s transfer to lift capital features tax will depart a £23 billion gap within the public purse. Analysis of official forecasts suggests Rachel Reeves’ tax raid has backfired after traders regarded to promote property earlier than the brand new charges got here into pressure subsequent week, it has been reported.

The Office for Budget Responsibility (OBR) revealed its newest forecast on Wednesday to coincide with the Chancellor’s Spring Statement. The Government’s monetary watchdog downgraded its forecast for capital features tax (CGT) revenues yearly over a six-year interval, making a £23 billion shortfall. CGT receipts are £2.4 billion decrease in 2024/25 and a median of £4.1 billion a yr decrease over the rest of the forecast.

Ms Reeves introduced rises in CGT in October throughout her first Budget, elevating the decrease charge to 18%, up from 10%, with the upper charge growing to 24% from 20%.

CGT is charged on revenue from promoting an asset that has elevated in worth, equivalent to shares that aren’t held in an ISA, or a second residence.

The tax applies to people, but in addition to firm homeowners, companions in a enterprise, and self-employed individuals, amongst others.

CGT additionally covers freely giving an asset as a present or transferring it to another person.

Alex Davies, from funding platform Wealth Club, stated elevating CGT was “a ridiculous move from a government allegedly determined to ‘kickstart growth’.”

He advised The Telegraph: “Put rates up and people change their behaviour, from rushing to sell before rates rise to holding on to assets for much longer in hope of a future rate cut. The result is fewer tax receipts long term and less economic growth as people transact less.”

Ms Reeves delivered her spring assertion on Wednesday, saying welfare cuts – which have confronted robust criticism – and a £2.2 billion improve in defence spending.

The OBR halved its progress forecast for this yr to 1% however upgraded its progress forecasts for the 4 years from 2026.

Ms Reeves blamed “global uncertainty” as she introduced the welfare cuts, saying the world was “changing before our eyes” amid heightened tensions throughout the globe.

The Express has approached the Treasury for a remark.