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Capital gains tax boosts HMRC revenues

The latest HMRC receipt shows £5.5 billion was taken in capital gains tax (CGT) in January, while the taxman is set to collect around 5% more than in 2016-17, according to NFU Mutual.

As people fill in their self-assessment tax forms in January, HMRC usually receives an excess of capital gains tax in receipts. This means the Treasury are set to rake in £8.8 billion this tax year.

“These numbers are predicted to rise steeply with the Office of Budget Responsibility (OBR) estimating receipts will hit £9.9 billion in in the next year,” said Sean McCann, chartered financial planner at NFU Mutual.


According to McCann, a large chunk of these receipts will stem from people selling houses and flats they’ve been renting out. By doing so, they are hit by an extra 8% surcharge on standard rates of capital gains tax.

He added: “The OBR forecasts show receipts increasing sharply to £13.3 billion in five years’ time, which suggests that more and more buy-to-let investors are expected to unload properties as tax changes bite.”

Capital gains tax can be charged when assets and investments are sold or given away. For most assets such as shares, gains are taxed at 10% or 20%. Those selling a secondary property will pay 18% or 28% depending on their other income and the size of the gain.

McCann continued: “The slashing of tax relief on mortgage interest payments means that for a growing number of landlords, the figures no longer add up. Many have enjoyed rising property prices over many years and will seek to cash in, providing a tax bonanza for the government.”

“Many of our customers work in partnership with their spouse or civil partner to reduce their combined tax bills, taking advantage of each individuals CGT allowance of £11,300, by transferring shapes and property between them.”

“However,” he went on, “we’ve been warning our customers to watch out for potential tax traps. In some circumstances, transferring property between spouses could trigger a stamp duty charge.”


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