CGT receipts hit record £16.7bn in 2021/22

Capital gains tax (CGT) receipts hit a record £16.7bn in the 2021/22 tax year, up 15% on the previous tax year.

The results, released by HM Revenue and Customs (HMRC), found that the number of payers was also up 20% in the latest tax year, standing at 394,000, which is more than double what it was a decade ago.

Furthermore, it was found that most CGT comes from the small number of taxpayers who make the largest gains.

In 2021/22, 45% of CGT came from those who made gains of £5m or more. However this group represents less than 1% of CGT taxpayers each year.

London and the south east of England accounted for around half of total gains (49%) and tax liability (51%) in the 2021/22 tax year. These figures are broadly constant over time and there is a stable regional distribution overall.

Head of investment analysis at AJ Bell, Laith Khalaf, said: "Taxpayers are forking out record amounts of CGT, according to latest figures from HMRC. The number of people paying CGT has more than doubled in the last decade, and is set to explode in coming years as the CGT allowance is slashed from £12,300 to £3,000.

“CGT has often been characterised as a rich person’s tax, with some justification seeing as you used to be able to make £12,300 of gains each year before the taxman asked for any dues. However now the allowance is being cut to £3,000, the net is going to be cast a lot wider, and more small shareholders are going to find themselves trapped in it.

“The easiest way to avoid paying capital gains tax on your shareholdings is to hold them in an ISA, though clearly this isn’t possible if the asset you’re investing in is a property, on which you will also face an extra 8% capital gains tax surcharge on any profits you do make.”

Tax and financial planning expert at Quilter, Rachael Griffin, added: "The data around CGT when it comes to property sales is significant with 139,000 taxpayers reporting 151,000 disposals of residential property in the 2022/23 tax year amassing a total liability of £1.8bn, which is much larger than in the 2020/21 tax year. This data suggests that there is an exodus of landlords from the property market as the tightening of tax laws on buy-to-lets make them a more unattractive investment.

"Coupled with this the continuing high property values but simultaneous threat of a property price crash is seemingly making more landlords opt to sell up. How this ultimately impacts the market for all prospective buyers and renters is yet to be seen. Currently property prices are slipping slowly but rent remains sky high as renters compete for a dwindling stock of rental properties."

Tax partner at Evelyn Partners, Toby Tallon, concluded: “Looking to the future of CGT, both the Chancellor and Shadow Chancellor have said that they want to prioritise growth and business. [Last year] brought a lot of upheaval in tax, including four Chancellors.

“For now, in the determination of key strategic priorities the Government is likely to accept that it cannot do everything, which could imply that major tax reforms, including to CGT, are off the agenda. An exercise in assessing the value for money of reliefs in the tax system is likely to guide any possible changes, including tinkering with CGT reliefs, particularly as only a third of the reliefs have been officially costed.”

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