Capital Gains Tax Increase: UK Government Targets Cryptocurrency and Stocks

New UK Capital Gains Tax Announcement

In a notable shift, British finance minister Rachel Reeves announced on Wednesday, October 30, a hike in the capital gains tax rates for most assets, including cryptocurrency and stocks. The tax rate will increase from 10% to 18% at the lower rate, and from 20% to 24% for higher earners.

Reasons Behind the Adjustment

Reeves stated that these adjustments are projected to generate £2.5 billion, aligning capital gains tax with the rates applied to property transactions, which will remain steady at 18% and 24%. She emphasized the need to drive growth, promote entrepreneurship, and support wealth creation to fund public services and restore public finances.

Impact on Fund Managers and Entrepreneurs

• Capital gains tax is imposed on profits exceeding £3,000 made from asset sales.
• The carried interest tax will rise from 28% to 32%.
• Business Asset Disposal Relief will remain at £1 million, but rates are set to increase in upcoming years.

According to the Office for Budget Responsibility (OBR), these measures are expected to bring in an extra £2.5 billion by the end of the forecast period, with past data showing that capital gains tax raised £15 billion last year.