Capital gains tax (CGT) collected in the year ending January 2022 in the UK has risen by 20% in 12 months, analysis by accountancy group UHY Hacker Young has found.
The total sum hit £12.9bn ($17.5bn, €15.3bn), up from the £10.8bn of the previous year.
According to UHY, the sharp increase can be explained with the rise in tax on entrepreneurs selling their businesses, higher profits for buy-to-let property investors, and the stock market rally.
Business owners saw the entrepreneurs relief being slashed from £10m to a meagre £1m in March 2020, with some having to pay millions in extra tax.
Property investors also benefitted from generous profits in the housing market, considering that house prices rose 16% between January 2020 and December 2021.
Additionally, the FTSE 100 increased 42% from its pandemic low point to the end of 2021, all factors leading to higher CGT liabilities.
‘Massive year for CGT bills’
Phil Kinzett-Evans, partner at UHY Hacker Young, said: “This is a very sharp increase in CGT largely paid for by an increase in taxes on entrepreneurs selling businesses.
“The last year has seen some entrepreneurs pay seven-figure sums in extra tax they weren’t expecting. Entrepreneurs’ relief was a vital incentive for individuals to start and build businesses and the 90% cut the Treasury introduced has hit hard.
“A lot of entrepreneurs accelerated plans to exit their businesses when rumours of the end of entrepreneurs’ relief started swirling in 2019 and 2020. Those who did saved themselves millions in tax by doing so.
“The red-hot housing market of the last 18 months was also a great opportunity for buy-to-let investors to sell properties and benefit from the equity they had built up. Add that to a great rebound from the start of the pandemic for the stock market and HM Revenue & Customs has had a massive year for CGT bills.”