Andy Burnham, the new Labour MP for Makerfield, is at the center of growing concerns around proposed changes to Capital Gains Tax (CGT) policy, which could significantly increase the tax burden on many families. Two major reforms under discussion—the abolition of CGT uplift on death and the alignment of CGT rates with income tax rates—have ignited warnings from financial experts and investors alike.
Rathbones has highlighted speculation that CGT rates might be increased to match income tax rates, pushing the rate as high as 45% for additional-rate taxpayers. Under such a scenario, an additional-rate taxpayer realizing a £50,000 gain outside tax shelters like ISAs and pensions could face a tax bill of £21,150. This represents a steep jump from the current £11,280—an increase of almost £10,000. Higher-rate taxpayers would also see a notable rise in their tax liabilities.
For example, a £10,000 gain would incur a tax charge of £2,800, up from £1,680 under current rules. For gains of £50,000, the tax burden would rise to £18,800 compared to £11,280 today. Even basic-rate taxpayers would be affected, with tax bills on a £10,000 gain increasing from £1,260 to £1,400 if CGT rates were aligned with income tax.
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Ed Wood, Financial Planning Director at Rathbones, comments: “There has been a sharp rise in client enquiries about CGT amid speculation over the new government’s fiscal plans. With other major taxes already addressed, CGT is seen as an attractive target for additional revenue.”
Wood warns, “Increases to CGT could deter investment at a time when the UK needs private capital to drive economic growth. Moreover, higher tax rates don’t always translate into higher revenue because taxpayers often alter their behavior in response.”
He adds, “For many, removing the CGT uplift on death feels like a double blow. Inherited wealth could face inheritance tax and additional CGT on gains accumulated during the deceased’s lifetime.”
The upcoming inclusion of unused pension pots in inheritance tax calculations adds to concerns that an ever-larger portion of family wealth will be absorbed by taxes.
Wood also highlights practical challenges: “Eliminating CGT uplift on death could create a paperwork nightmare for executors, who may need to trace decades of asset ownership, reconstruct purchase history, account for past improvements, and determine original acquisition costs. For families already coping with loss, this complexity could cause stress, delays, and increased costs.”
“This reform risks adding significant administrative burdens at a time when families are least equipped to manage them,” Wood concludes.