Many commentators are speculating that the Capital Gains Tax (CGT) rate could be aligned with income tax rates, which would be a return to the system in place when Gordon Brown was Chancellor. Given Rachel Reeves’ admiration for Gordon Brown, it’s possible we could also see the reintroduction of taper relief. There is hope that Business Asset Disposal Relief (BADR), or a similar scheme, will continue to support entrepreneurship and economic growth. Rachel Reeves might even consider bringing back Business Asset Taper, another of Gordon Brown’s policies, which reduced the effective CGT rate to 10% after 10 years of ownership. If relief aimed at entrepreneurs is maintained, it’s possible that the conditions for qualifying may become even more stringent.
Other potential CGT changes to watch for include additional restrictions on private residence relief and amendments to hold over relief for transfers into and out of trusts. A more contentious change could involve scrapping the CGT-free uplift to probate value on death, requiring beneficiaries to inherit the deceased’s CGT base cost instead. This suggestion was previously raised by the now-disbanded Office of Tax Simplification (OTS).