This is information rather than advice. Anyone with UK capital gains exposure should take qualified counsel before the budget.
- Wealthy Britons are accelerating transactions to secure the current 24% higher rate of capital gains tax ahead of Chancellor John Healey’s October 28 budget. Iain Tait of wealth manager W1M called it the number-one issue, with clients asking how to crystallise gains at 24%, while Chris Etherington of RSM UK said people are rushing to get deals done.
- The precedent suggests the revenue is borrowed rather than earned. Rachel Reeves raised the rate from 20% to 24% in 2024, and combined capital gains and inheritance tax receipts exceeded £30 billion in 2025-26, up almost 40%, which Bloomberg attributes to Britons disposing of assets in anticipation of the increase. That is acceleration, not a higher sustained yield.
- The pressure is structural rather than ideological. Prime Minister Andy Burnham recommitted to Labour’s promise not to raise income tax, national insurance or VAT, the three largest revenue sources, while the Institute for Fiscal Studies says Healey must find £35 billion. Ruling out the big three leaves capital gains disproportionately exposed.
- The behavioural response is already measurable. Individuals representing about $160 billion on the Bloomberg Billionaires Index have left the UK in the past two years, British hedge fund founder Chris Rokos has relocated to Greece, and an August poll of 500 UK business owners by S and W found around half would consider leaving if capital gains taxes rise.
What Happened?
Healey will combine short-term cost-of-living support with efforts to stabilise public finances hit by spending pressures and the fallout from the US-Iran war. A person familiar said a capital gains increase remains live, though aligning it with income tax rates is unlikely. Ollie Saiman of Six Degrees said he would be unsurprised to see the top rate climb to 26% or even 28%. The Treasury declined to comment ahead of the budget. Konstantin Sidorov, whose fund holds a gain of more than 500% on Revolut, called a dedicated wealth tax a red line that would make him consider relocating after more than a decade, and said higher capital gains taxes would mean fewer investors willing to take risks. John Caudwell, who sold Phones 4u for about $1.6 billion two decades ago under Gordon Brown’s tapered relief for long-term holdings, which Alistair Darling scrapped in 2008, argued for its reintroduction to encourage founders to hold businesses for twenty or thirty years. Ben Yearsley of Fairview Investing said he does not think Healey is foolish but that backbenchers advocating taxing the rich do not consider the consequences.
Why It Matters?
The 2024 experience is the most instructive evidence available and it undercuts the fiscal case. Receipts jumped almost 40% to over £30 billion, and the article is explicit that this came from people selling ahead of the change rather than from the higher rate applying to normal activity. Pre-announcement acceleration pulls future revenue into the present and leaves a depleted base behind, so the Treasury books a strong year followed by a weaker one. Exactly the same behaviour is being reported now, which means a further increase would likely produce the same shape again. Anyone assessing whether these measures raise money should look at the second and third years rather than the first. The structural explanation for why capital gains keeps being targeted is worth understanding and has nothing to do with fairness. Income tax, national insurance and VAT raise the overwhelming majority of UK revenue and have been ruled out politically, while £35 billion needs finding. Capital gains is what remains, and it raises comparatively little, so the rate has to move a long way to fill a gap of that size. That arithmetic is why advisers expect further increases regardless of the chancellor’s own instincts. On the flight question, the evidence here is better than in most such debates. Polling that half of business owners would consider leaving is weak evidence, since considering is not doing, but $160 billion of billionaire wealth already departed over two years is measured outflow, and the relocation of a prominent British fund founder to Greece indicates it extends beyond internationally mobile non-domiciles. The Caudwell proposal is the constructive contribution and addresses a different question from the rate: tapered relief rewards holding duration rather than taxing the realisation event, which changes founder behaviour rather than simply the amount collected.
What Next?
October 28 is the date, and the same budget is expected to address a possible windfall tax on domestic banks. For anyone with UK capital gains exposure, the window to act at 24% is now a matter of days, and the decision requires qualified advice rather than anticipation. Watch whether any increase is accompanied by taper relief or other design changes, since the structure matters as much as the rate for behaviour. Receipts in the 2027-28 fiscal year will reveal whether this round produces the same borrow-from-the-future pattern as the last. The broader question of whether the UK retains its position as a wealth hub will be judged by departures over the following year rather than by the budget itself.
Affected Tickers and Coins: EWU
Source: Bloomberg
