Capital Gains Tax (CGT) receipts rose 43% to £14.3bn for the 2020/21 tax year, according to data from HMRC this morning.
The Office for Budgetary Responsibility has predicted CGT receipts will reach £20.7bn by 2026.
Receipts were £10.06bn for 2019/20.
The Government’s income from CGT has more than tripled over the past 10 years.
In 2012/13 HMRC data showed relatively modest CGT receipts of £3.8bn.
From April 2019 the Government increased the rate for gains on disposals of property to 18% and 28% as well as introducing CGT for offshore trusts and non-UK resident individuals on the disposal of interest in UK land and property.
CGT is currently payable on the profit when owners sell assets which have increased in value above the tax-free allowance, otherwise known as the CGT exemption.
Basic-rate taxpayers pay 18% CGT on property sales, with higher-rate taxpayers paying 28%. Gains from selling other assets are charged at 10% for basic-rate taxpayers and 20% for higher-rate taxpayers.
The Government has frozen the CGT exemption at £12,300 until April 2026, meaning CGT receipts are likely to continue increasing due to inflationary increases in the value of assets.
Andrew Tully, technical director at Canada Life, said there are plenty of options for financial advisers looking to help clients reduce CGT bills.
He said: “There is a considerable amount of planning which can reduce CGT bills. The simplest is holding assets within tax-efficient wrappers such as pensions and ISAs, rather than as direct investments. Investment bonds also have a key role to play where other tax advantaged investment wrappers have been fully utilised, being able to shelter gains made in the underlying funds until withdrawals in excess of the cumulative 5% allowance or full surrenders are made. Where gains do arise, these are subject to income tax, not CGT.
“People could also consider transferring assets into joint names if married or in a civil partnership, or spreading disposals over different tax years.”
