Speculation continues to mount over potential changes to the United Kingdom’s capital gains tax (CGT) system under a future Labour government led by Andy Burnham. Amid growing calls for reform, CGT—a tax levied on profits from the sale of assets such as investment properties, shares held outside tax-free ISAs, antiques, cryptocurrency, and businesses—is at the forefront of discussion.
CGT collections have surged in recent years, reaching a record £22.2 billion in the 2025/26 tax year, up 62% from £13.7 billion the previous year. This increase has been partly attributed to the raising of CGT rates in Chancellor Rachel Reeves’s first Budget, with rates now set at 18% for basic rate taxpayers and 24% for higher and additional rate taxpayers. The freeze on income tax thresholds has also played a role by pushing more individuals into higher tax brackets, potentially increasing their CGT liabilities on disposals.
Looking ahead, the Office for Budget Responsibility forecasts CGT revenues could rise further to £27.3 billion by 2029/30. However, senior Labour adviser Louise Haigh has suggested that these figures may still fall short of party ambitions. Haigh has advocated for aligning CGT rates with income tax bands, meaning rates could increase to 20%, 40%, or even 45%, depending on the taxpayer’s bracket. In addition, she supports removing the current “uplift” in asset values at death—a provision that currently allows beneficiaries to inherit assets at their market value at the date of death, thereby avoiding CGT on gains accrued during the previous owner’s lifetime.
Financial planning experts warn that this change could lead to “double death taxation.” Under the current system, if an asset was purchased for £100,000 and valued at £200,000 at the owner’s death, beneficiaries face no CGT liability initially. Without the uplift, they could owe CGT on the gain of approximately £97,000 after accounting for the annual exempt amount, potentially resulting in a tax bill ranging from £17,460 to £23,280. Higher CGT rates would increase this liability further. These costs could be compounded by inheritance tax, creating significant financial burdens, particularly for those inheriting business assets or family companies.
The implications for business owners may be particularly severe. For instance, entrepreneurs passing on a company valued at £5 million could face multimillion-pound tax liabilities, prompting concerns about the potential deterrent effect on business succession and enterprise.
Even advocates of CGT reform caution against sweeping changes without addressing underlying issues. Dan Neidle, founder of Tax Policy Associates, highlighted that current CGT calculations often include gains purely due to inflation, rather than real increases in value. He argues that reform should better distinguish genuine gains from inflationary effects if any major adjustments are pursued.
There is also ongoing debate about introducing an “exit tax” to prevent entrepreneurs from relocating abroad to escape higher CGT rates, although critics warn such measures could discourage entrepreneurship and investment in the UK.
As discussions progress, proponents and opponents alike acknowledge that any significant revision of the capital gains tax system will be politically sensitive and could have wide-reaching economic consequences.