Navigating Capital Gains Tax UK Budget changes: 5 expert answers to your top questions

Based on Keir Starmer’s statements that he “does not want to raise tax on the ordinary working person” and that “those with the broadest shoulders should bear the heaviest burden,” it is logical to expect that both Capital Gains Tax (CGT) and Inheritance Tax (IHT) will be scrutinised.

This scrutiny could particularly affect those in higher tax brackets. While CGT rates and reliefs are vulnerable to changes, it is less likely that IHT rates will increase. However, many IHT reliefs may no longer align with policy objectives and could be at risk of being reduced or eliminated.

While it is hard to say what will happen further ahead, there has been clear moves to seek an increase in tax revenue in recent years from both Labour and the Conservatives. The general trend is towards higher levels of taxation and therefore I wouldn’t expect a future government to unwind in their entirety increases to CGT and IHT. Historically CGT and IHT have been seen as somewhat optional taxes that can be navigated, but with the public finance situation and increasing asset values they will likely to continue attracting more focus going forward.

I’m personally surprised that the CGT uplift on death remains, as this isn’t a feature in most countries. Implementing such a significant change would be complex, but it is possible. Given the current economic pressures and the Labour government’s focus on ensuring those with the broadest shoulders bear the heaviest burden, it’s likely that IHT could be reviewed in the medium term. This review might include reconsidering the existing reliefs, potentially leading to both CGT and IHT being applied to inherited assets.

Yes, the government can change the rate immediately on 30 October. This has happened before, such as in 2010. However, while immediate changes are possible, it’s more likely that significant changes will take effect from 6 April 2025, aligning with the new tax year.

The uplift on death is a significant cost to the Treasury and could be reconsidered as part of a broader review of Inheritance Tax (IHT). However, implementing such a substantial change by 30 October seems unlikely. While it’s possible that the government may eventually address this issue, it would likely require more time and consideration due to its complexity and the potential impact on taxpayers.

Although there is precedent for backdating tax changes, and there are similar rumours from the US, implementing a higher rate retrospectively feels like a step too far. While it’s technically possible, such a significant change would likely face considerable pushback and could be seen as unfair to taxpayers who made financial decisions based on the existing rules.