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The significant increase in capital gains tax receipts indicates a successful, albeit potentially disruptive, government revenue-raising strategy. Factors such as increased tax rates, reduced exemptions, and proactive asset disposals ahead of anticipated changes have all contributed to the record collection. This trend may continue to influence investor behavior and asset pricing, particularly in volatile markets or segments like cryptocurrency. The concentration of gains among a small percentage of taxpayers suggests potential future policy considerations regarding wealth distribution and tax fairness.
LONDON The UK government collected a record 24.2 billion in capital gains tax (CGT) in the 2024-25 tax year, marking an 89% increase from the previous year. This surge, driven by former Chancellor Rachel Reeves’s policy changes and increased taxpayer engagement, saw the number of CGT payers climb by 45% to an all-time high of 584,000.
HM Revenue & Customs (HMRC) data indicates that the government’s revenue from CGT rose significantly following an increase in main tax rates implemented in October 2024. Basic-rate taxpayers now face an 18% rate, up from 10%, while higher-rate taxpayers see their rate increase from 20% to 24% on asset disposals.
HMRC also attributed the substantial increase to cuts in annual tax reliefs in prior years. Furthermore, public anticipation of the 2024 budget prompted a wave of asset sales and disposals as individuals and businesses sought to lock in lower tax rates before the anticipated hikes.
Sean Cockburn, private client partner at Forvis Mazars, commented that the spike is a result of multiple factors, including wider tax application due to reduced annual exemptions and increased headline rates. He added that investors, landlords, and businesses have been accelerating asset disposals, driven by both strategic decisions and necessity. Cockburn suggested that CGT is likely to remain a focus for potential policy adjustments in upcoming budgets.
The data revealed that a significant portion of the tax revenue originates from a small group of high-gain taxpayers. In the 2024-25 period, 45% of total receipts came from individuals with gains of 5 million or more, a segment representing less than 1% of all CGT taxpayers annually. Geographically, taxpayers in London and the south-east of England accounted for half of the total amount collected.
In a new development, HMRC’s first publication of crypto asset tax data showed 240 individuals earning millionaire status from cryptocurrency sales in the 2024-25 tax year. A total of 17,600 individuals reported disposals of crypto assets, including Bitcoin, Ethereum, and Dogecoin, generating 1.38 billion in capital gains liable for tax. The data also highlighted a gender disparity, with 87% of crypto CGT taxpayers being men and approximately 13% being women.
A spokesperson for the Treasury stated that the Chancellor remains focused on economic priorities such as providing relief to families and businesses, supporting jobs, and fostering growth across the country. The revenue generated from CGT is directed towards these objectives, with the tax still affecting only around 1% of the British population annually.
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