What are the Labour Party Capital Gains Tax Potential Increases?
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- Опубликовано: 18 сен 2024
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The Labour Party’s recent discussions and proposals regarding potential changes to Capital Gains Tax (CGT) in the UK have sparked significant debate. Here’s an overview of what’s being said:
Increased Rates for High Earners: Labour is considering increasing Capital Gains Tax rates for high-income individuals and large investors. Currently, the CGT rates are 10% for basic rate taxpayers and 20% for higher rate taxpayers, with an additional 8% surcharge on residential property gains. Labour's proposals may see these rates rise, aiming to create a more progressive tax system where wealthier individuals contribute a greater share of their capital gains.
Alignment with Income Tax: There is speculation that Labour might align CGT rates more closely with income tax rates. This could mean that gains are taxed at the same rate as ordinary income, which could be as high as 45% for the highest earners. This alignment would significantly increase the tax burden on those with substantial capital gains.
Closing Tax Loopholes: The Labour Party is also considering measures to close existing tax loopholes that allow individuals and businesses to minimize their capital gains liability through various schemes and allowances. By tightening regulations and reducing opportunities for tax avoidance, Labour aims to ensure that all capital gains are taxed more fairly.
Impact on Investments: The proposed changes are expected to impact investors, particularly those involved in real estate, stocks, and other high-value assets. Increased CGT rates and tighter regulations could influence investment strategies and potentially dampen speculative activity in certain markets.
Revenue for Public Services: Labour argues that increasing CGT rates and closing loopholes will generate additional revenue that can be invested in public services and infrastructure. This aligns with the party’s broader economic strategy of using tax policy to fund social programs and address inequality.
These potential changes to Capital Gains Tax reflect Labour's broader policy goals of increasing tax fairness and addressing economic disparities. If implemented, they could lead to substantial adjustments in how capital gains are taxed and may influence both individual and institutional investment behaviors in the UK.
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Most so called "gain" is inflation and no actual real gain at all. To then tax this devalued 'money' is an insult.
A very sensible argument 👍
Absolutely.
That's a weak argument though in practice because 2% is typically accepted as a norm. There will always be inflation, so a gain from inflation is still again.
That's a weak argument though in practice because 2% is typically accepted as a norm. There will always be inflation, so a gain from inflation is still again.
@@OneAndOnlyMeGive me a break. Absolute BS. Manipulating inflation stats are the very first lie that these people peddle to cover up their profligate Govt spending. Nobody believes that rubbish any more.
There's over 4 years left of these inept politicos. 🤦♂
I fear a lot more
In Canada, the sale of your primary residence is free of CGT, like the UK. Recently, the CGT rules have changed. Up to $250,000 is 50% discounted, but above $250,000 is now only discounted 33%.
You are spot on with the home exceptions in both Canada and the UK.
Typically my subscribers our property investors so the potential changes of cupcakes act has a significant risk over their portfolio
Kamila Harris (US presidential candidate) is proposing the idea of a tax on unrealised capital gains (so you could be taxed without actually selling an asset). To be fair, initially only on individuals with more than $100M, but the idea is scary. As an example, if your shares go up one year you would build up a tax liability and then potentially have to sell them at fire sale prices a year later to pay that tax if their price has dropped back down. Hope that idea isn't suggested in the UK.
I have been monitoring this very closely as I have US and UK clients 🙄
There is a reasonable argument to be made for this. Over time asset values rise, and eventually a point is reached where even in a dramatic drop means the value won't go below a certain "floor" value because it would be just deemed way undervalued. This organic gain should be taxed in my view.
The great thing about cgt is that you can just not sell and wait for a better rate when Labour leave in 5 years. Why would you pay 45 on say 10million when you can just hold and wait for a new government which will put it back down again once they have worked out tax revenue goes down when rates go up
Because 5 years for many people is too long and in 5 years time labour can win again and then you have 5 more years . Remember that the tories were in power for 14 years.
@@CUNDUNDO labour win again?! I am willing to wager you any amount
@@CUNDUNDO Agreed
Agreed but I can see that the Labour Party might be around for some time
Are you trying to justify Labour manifesto by putting those 3 high tax rates countries!! You have hardly talked about UK CGT at all here!
I made direct comparisons to the UK. Might be worth watching again to see that I looked at the current UK CGT rules and compared them to other countries
Why did you focus on USA, Canada and Australia. Most people would move to Spain, France, Italy and German where cgt is much lower than income tax
Most of my clients choose to live in these counties and HMRC look at the G7 for tax ideas which are mentioned here except of course Australia but they have a similar tax system years ago bearing in mind their connection with the UK
The drop of CGT on residential property from 28% to 24% on residential property wasn't strange it was to incentivise the smaller "amateur" and "accidental" landlords (like me) to leave the market and conveniently for the larger investment company likely buyers create a flood of such properties all coming onto the market at the same time depressing prices.
As it takes some time to sell UK property to go through all the legal and survey issues, exchange contracts then typically a further month to completion time is getting tight to meet a 5th April 2025 deadline. Also, currently tenanted properties require two months notice to vacate).
If the government really want to incentivise certain landlords to get out of the market I wonder if they will extend the special rate of 24%? A "rug pull" approach of massively hiking the rates overnight after the budget would not raise extra money or release properties. I for one would simply not sell as I am currently planning to do.
I totally agree with you 👍
You need to consider how much revenue any capital gains tax rate increases will raise. Jeremy Hunt justified reducing the higher rate capital gain tax rate from 28% to 24% because the Treasury said it would raise additional revenue.
They never did make sense 🙄
A 45% cgt would be the highest in Europe and stupid. So it’s a certainty for Labour
Agreed 👍
I am confused. I can someone help me here. I thought that at the moment there is zero CGT on your residential home. Is that right? And the Labour manifesto clearly DID NOT say anything up to 2024 May election about CGT. If that is right, why is the video describing Labour 2024 manifesto as imposing a CAPITAL GAINS TAX ON RESUDENTIAL PROPERTY after a £ 3000 threshold?
Buy to let residential properties. Our channel focused on buy to let. The manifesto talked about taxes and their recent communication also spoke about CGT reform. The video does say “possibilities”
Any thought on Business Asset Disposal Relief and also if Labour would bring these changes straight away in October or if it would be delayed until next tax year?
Sadly no clue in this one. I have ideas in wealth tax though to be be released next week 🙌
People who get all their "income" through capital gains don't get a £12,000 exemption. Retail financial markets traders for example.
That is because of the badges of trade for income tax purposes
Or retirees!
Great Simon. thank you. I would like to see these helpful figures together with Stamp Duty Land Tax, as this is another property tax although at the purchased point. It all combines to give a better picture of government taxations per country, although not CGT.
On my list for sure 👌
Any thoughts on them bringing back indexation if they raise the tax rates, as this seems fairer as it allows for inflation?
You have better chance of winning the next election sadly
Hi, I got a residential property in London boot years ago.for £240000 now is worth 490000 . i’m high rate taxpayer .question is how much taxes I have to pay now if I decide to sell it.. and how much taxes I have to pay if the labour government gonna do some changes? what your thought about that? I was thinking maybe I need to sell it.
If the property is your home then no capital gains tax will be due. CGT will only be due if you have rented the property out for more than nine months of living in the property.
It is always a gamble to make a financial decision just because of tax. You could be in danger of selling a property that increases in value significantly in the future just to save a bit of tax now.
Any ideas on a change to tax in dividends for company owners?
I do not think that there will be many changes this time on dividends.
However, I believe that dividends will be taxed as normal income at some point in the future
That is quite typical in a lot of European countries rather than have a preferential rate
The way this country is being run there could be a massive deflationary collapse with property prices taking a big hit .You could be selling now at the top of the market .On the other hand there could be money printing into hyper inflation where money from a property sale could be worth very little and hanging on to a hard asset may be the best option. Do you feel lucky ? Which opton do you take ?
Thank god I’m a nobody ,only thing I’ve got left is my consciousness, nothing behind it , except….. the void of space , earth zombie.
😀🤩
CGT is in the main a tax on inflation.
Interesting viewpoint 🤔