Latest news with #capitalgainstax
Daily Mail
23-07-2025
- Business
- Daily Mail
Labour's tax raids on wealthy 'already backfiring' as Reeves prepares to come back for more: CGT revenue drops as Goldman Sachs boss warns London's status as global financial hub is at risk
Labour has been warned that tax raids on the wealthy are already 'backfiring' amid signs that Rachel Reeves is preparing to come back for more. Analysts have pointed to figures showing capital gains tax receipts dipping in the first half of the year, despite the Chancellor hiking rates. Meanwhile, the boss of Goldman Sachs has raised concerns that further efforts to bring in revenue could fuel an exodus, with London 's status as a financial hub 'fragile'. Ms Reeves is desperately hunting for options to increase taxes as she faces an estimated £30billion black hole in the public finances at the Autumn Budget. The tax burden is already set to hit a new high as a proportion of GDP after the last Budget imposed a £41billion increase - the biggest on record for a single package. Labour has ruled out increasing income tax, employee national insurance or VAT. The Chancellor again refused to rule out a wealth tax yesterday, with backbenchers floating a percentage charge on assets to raise billions of pounds a year. However, Shaun Moore, tax and financial planning expert at investment firm Quilter, warned such moves could actually cause more harm to revenues after a crackdown on 'non doms'. At the Budget last year Ms Reeves increased the lower rate of CGT from 10 per cent to 18 per cent and the higher rate from 20 per cent to 24 per cent. But in the first six months of this year the tax raked in £11.8 billion, compared to £13.5billion during the same period in 2024. The receipts for 2024-25 were around £200million lower than the Treasury's OBR watchdog had anticipated. The body has forecast that revenues will surge in 2025-26. 'The government's decision to slash capital gains tax allowances and hike rates has backfired,' Mr Moore said. 'The policy may have been designed to raise revenue, but it's instead prompted behavioural shifts that have dented the tax take.' He added: 'While taxing the wealthiest may sound politically appealing, the CGT experience shows that people will change behaviour or adjust their financial plans to mitigate the tax bills.' Goldman Sachs chairman and chief executive David Solomon told Sky News presenter Wilfred Frost's The Master Investor Podcast that talent in the financial industry was 'much more mobile' than 25 years ago. 'London continues to be an important financial centre. But because of Brexit, because of the way the world's evolving, the talent that was more centred here is more mobile,' Mr Solomon said. 'We as a firm have many more people on the continent. Policy matters, incentives matter. 'I'm encouraged by some of what the current government is talking about in terms of supporting business and trying to support a more growth oriented agenda. 'But if you don't set a policy that keeps talent here, that encourages capital formation here, I think over time you risk that.' Mr Solomon cautioned that the status of the City of London was 'fragile' and could 'fray' if not treated with care. The public sector borrowed £20.7billion last month, far higher than the £17.6billion analysts had pencilled in 'Incentives matter if you create tax policy or incentives that push people away, you harm your economy,' he said. 'If you go back, you know, ten years ago, I think we probably had 80 people in Paris. 'You know, we have 400 people in Paris now... And so in Goldman Sachs today, if you're in Europe, you can live in London, you can live in Paris, you can live in Germany, in Frankfurt or Munich, you can live in Italy, you can live in Switzerland. 'And we've got, you know, real offices. You just have to recognise talent is more mobile.'
News.com.au
21-07-2025
- Business
- News.com.au
‘Too long': Call to flip major tax breaks for property owners
Thousands of new houses could be built in the next five years with tweaks to tax rules that Labor has resisted 'for too long', experts say. Increasing tax breaks for investors in new properties is needed for Australia to meet its 'ambitious' 1.2 million home target by 2030 according to a new research paper by The McKell Institute. Four tweaks to capital gains tax – including an increase to the 50 per cent discount for new units but a reduction on discounts for detached dwellings – are being put forward as a 'circuit breaker'. The paper will be submitted to the federal productivity roundtable forum, which Treasurer Jim Chalmers is promoting as a way to build consensus on long-term economic reform. 'Labor has resisted change to the CGT discount for too long,' McKell chief executive Edward Cavanough said. 'The CGT tax discount is neither good nor evil, but it should be better calibrated to actually achieve our social aims.' 'Instead of encouraging property investors to bid up the price of existing housing stock we should be encouraging them to contribute to the construction of new dwellings.' Capital gains tax is paid when you buy an asset and then later sell it for a profit; the profit you make is taxed as income. The capital gains tax discount kicks in when, if you own an investment property for 12 months and then sell it, you only pay tax on half the profit you made. The richest 10 per cent of Australians reap the benefits of more than half the capital gains tax discounts, government data shows. Sale of the home you own and live in is exempt from capital gains tax. The plan projects up to 130,000 extra new homes could be built by 2030. 'A key problem with our existing tax settings on property is they orient too much investment toward established dwellings at the cost of new supply,' Professor Holden said. 'There is nothing wrong with the commonly held desire of everyday investors to secure their future by investing in the housing market. 'But this desire should be harnessed to achieve our national objectives on housing supply.' The federal government has set a lofty goal of 1.2 million new houses being built by 2030 that would require 220,000 new dwellings per year. About 160,000 new homes are built each year. The monthly new home target has been met just once since the target was set in early 2023, and even the federal Treasury has suggested the target will not be hit under the current policy settings. In tune with the McKell research, a group of rank-and-file Labor members has also thrown their voice behind a proposal to curb the tax discounts, with Labor for Housing saying a reduction in the discounts would help build more houses. Mr Chalmers has billed the roundtable meetings as a chance to set in motion aspirational reform. In June, Mr Chalmers said changes to capital gains tax was not something the government was 'looking at right now' but acknowledged there was appetite. 'I think it is really important we don't narrow that, limit that, those ideas people put forward. We've had a view about that in the past. I do suspect people will raise it, and we'll listen respectfully when they do,' he said.
Mail & Guardian
09-07-2025
- Business
- Mail & Guardian
Is buying a rental property the right investment for you?
James Carvalho, Director and Financial Planning Specialist at Chartered Wealth Solutions. (Image: Chartered Wealth Solutions) B y James Carvalho, Director and Financial Planning Specialist at Chartered Wealth Solutions Over the years, I've often been asked if owning a rental property a good idea? The short answer is, it depends. The decision is rarely straightforward and should be made in consultation with your financial planner. The appeal of owning a tangible asset is strong, but many people dive in without considering the full picture. Before you invest, ask yourself: Do I have the financial means to purchase and maintain the property – especially if I need a bond, or will I be using after-tax savings? Is this property meant to be a lifestyle asset, part of my retirement plan or simply a surplus investment? This decision should be part of a well-thought-out financial plan. Here are my top five key considerations when buying a rental property: 1. Upfront costs are significant If you're buying an existing property, you'll need to pay transfer and bond registration costs – often a large upfront expense. These costs are not usually covered by the bank and must be funded with after-tax money. However, if you're buying off-plan (ie, from a developer), you typically avoid transfer costs. 2. Tax implications All rental income is fully taxable. When you eventually sell the property, you may also be liable for capital gains tax. Don't forget that if you're acquiring a property, you need to make sure your will is up to date or that you have one drafted. Property is a fixed asset and should be properly accounted for in your estate. 3. Tenant risk The income only works if your tenant sticks to the lease agreement. If the property is vacant, even briefly, you're still responsible for all the expenses, including the bond repayment. Consider how long you could carry those costs without rental income. 4. Growth and rental increases Ideally, your property should grow in value and act as an inflation hedge. But for it to truly work for you, the rental must be market-related and adjusted on the anniversary of the lease agreement. Many owners leave rental prices unchanged just to retain a 'good' tenant. While this may avoid hassles, it erodes the long-term value of the investment. Also, capital growth depends on location and market cycles. For example, between June 2023 and June 2024, the national average house price growth was just 3.2%. Cape Town was the top performer, while Gauteng experienced a decline of -1.1%. 5. Tenants can make or break the experience There's the dream tenant, one who pays on time, takes care of the place – and then there's the nightmare tenant, one who is constantly late and frequently damaging the property. Over time, even enthusiastic landlords may grow tired of managing the stress and maintenance of a rental property. Many of my older clients no longer have the energy for late-night calls to, and chasing rent from, tenants. What's the alternative ? If your interest lies more in property as an asset class than in being a hands-on landlord, there are other ways to invest: Property shares on the JSE or international exchanges. Property income unit trusts. REITs (real estate investment trusts), which offer exposure to commercial and industrial property without direct ownership hassles. These vehicles allow you to benefit from property market returns without managing tenants, maintenance costs or bond payments. Like all asset classes, property comes with risks – vacancy, unexpected costs and market volatility. Whether you're buying bricks-and-mortar or investing via the markets, make sure it aligns with your financial goals. Your financial planner can help you weigh the trade-offs and help you make a decision that's right for your life stage and investment strategy. For more information, visit
Times
07-07-2025
- Business
- Times
How could a UK wealth tax work? The impact examined
Rachel Reeves needs money. The government's successive U-turns on winter fuel payments and welfare combined with lower-than-expected growth forecasts mean she could be facing a £30 billion hole in the public finances come the autumn budget. So where will the money come from? Lord Kinnock, the former Labour leader, joined unions and left-wing MPs at the weekend in calling for a wealth tax. The political logic is clear: Kinnock and others on the left believe that the wealthiest should pay the most. The practicalities are complex. What assets would be taxed? How do you define wealth? Would it actually work, given the fact that wealthy people can choose to simply leave the country if they feel that the tax regime is too onerous. • Neil Kinnock: Labour should bring in 'wealth tax' to balance books A succession of countries have tried wealth taxes, only to reverse them following concerns about how much money they raised. So what are the potential options? Capital gains tax is paid on the profit made from the sale of assets such as property, shares and other investments. Presently, it is set at a lower rate than income tax, which critics say is inherently unfair. For example, a higher-rate taxpayer will pay just 24 per cent capital gains tax on the profit from selling a second home or shares, while if that money was income it would be taxed at 40 per cent. Critics say the system is flawed and benefits richer people whose income is derived from assets rather than work. Angela Rayner, the deputy prime minister, suggested when in opposition that it should be levelled after Rishi Sunak, then the prime minister, disclosed that he was receiving significant sums through capital gains tax. In a report last year, the Institute for Fiscal Studies (IFS) said differences between capital gains tax and income tax were 'unfair', creating 'undesirable distortions, including to what people invest in and how they choose to work'. • No 10 and Treasury refuse to rule out wealth tax A recent report by the Centre for the Analysis of Taxation suggested that reforming capital gains tax, including the equalisation of rates, would raise an additional £14 billion. On Sunday, Kinnock suggested that Reeves should bring in a new tax on the assets of the super-wealthy that would be charged at a rate of 2 per cent on assets of more than £10 million. He suggested it could raise as much as £11 billion for the Treasury. Supporters say the new tax would affect just 20,000 people, who would have the ability to pay without experiencing a significant change in their financial situation. However, critics point out that the super-wealthy are also highly mobile and it could result in lower revenues for the Treasury if a significant number of those affected decide to leave the country. The additional rate of income tax for those earning more than £125,140 is levied at 45 per cent. Those on the left have consistently called for the rate to be raised to 50p, a rate last introduced by Labour in 2010 before being cut back in 2013 by the subsequent coalition government. Increasing the additional rate is a topic of significant contention. The Conservatives claim that a lower level brings in more income because it encourages wealthy people to stay in Britain. The IFS previously said that increasing it would make a 'marginal contribution' to the public finances. One of the biggest sources of wealth that most people have is their pension pots and successive chancellors have eyed this area as a potential source of additional income. The most radical option for Reeves would be to lower the rate of tax relief on pension contributions. At the moment, higher-rate taxpayers get 40 per cent tax relief on all contributions, while basic-rate taxpayers can claim 20 per cent. The IFS has calculated that limiting upfront relief to the basic rate of income tax would raise £15 billion a year. However, it would lead to claims of double taxation because people also pay income tax on their pensions. • Paul Johnson: Rachel Reeves will need to face up to fantasists on both sides One less controversial reform may be to cut or abolish the £268,275 that can be taken by people from their pension pot tax-free when they retire. This subsidy has an estimated long-run annual cost of £5.5 billion and 70 per cent of the relief goes to pensions accumulated by those in the top fifth of earners. Ed Miliband's 2015 Labour manifesto promised an annual levy on homes worth more than £2 million, promising to raise in excess of £1 billion a year. The plan would have affected tens of thousands of properties and raised concerns about 'asset-rich, cash-poor' pensioners being forced out of their homes. Associations with Labour's loss in the 2015 general election may dissuade ministers from returning to the idea, which progressives say should be broadened to include more fundamental reform of council taxes. Britain has some of the highest property taxes in the developed world, but the country's biggest homes get off lightly. Despite surging house prices over the past three decades, especially in London and the southeast, rates are still fixed on 1991 values. The biggest homes in an area pay only three times as much as the smallest, despite being far more valuable, while rates vary dramatically around the country. Infamous examples such as the three-bedroom semi in Hartlepool that pays more council tax than Buckingham Palace make the case for reform, but no government has dared since the poll tax, which contributed to the fall of Margaret Thatcher. Adjusting the tax to reflect today's values would result in a £60 fall for the poorest tenth of households and a £750 rise for the richest, the IFS estimates. Seeking to raise more money would push up bills further for wealthy homeowners, but lead to a furious political backlash.
Daily Mail
05-07-2025
- Business
- Daily Mail
Should you buy gold coins from the Royal Mint to beat tax? HELEN KIRRANE visits its home in Wales
In a small town near Cardiff more than 7,000 coins fly off the press each day. The Royal Mint, in the Welsh town of Llantrisant, is behind a modern-day gold rush, as Britons buy coins to dodge capital gains tax and seek a safe haven from global turmoil. Last year, customers bought a record £750million worth of gold bullion coins from the Mint. There has been a 329 per cent jump in gold coin sales in the first three months of this year compared to the same period in 2024, indicating last year's gold coin sales record is likely to be smashed. Nestled on the edge of the Rhondda Valley, the red brick of the Royal Mint's brutalist architecture sticks out against the rolling green hills. When the Royal Mint was moved here from London's Tower Hill in 1968, Llantrisant was chosen as its new home, in part because of the vast open space the site offered. The town's population is around 15,000 and almost everyone who works at the Mint lives locally. During my visit to the Llantrisant HQ, Andy Dickey, director for precious metals at the Royal Mint, tells me: 'Tax rules can change, what won't go is the inflation-hedge aspect of gold. [It] has always generally performed well in times of uncertainty and instability.' A major draw is that bullion coins from the Mint are exempt from capital gains tax as they are classified as legal tender, while gold bars and coins bought outside of the Royal Mint are not. The gold price has soared 33 per cent this year, with conflicts, trade wars and other fears fuelling the surge. This has helped the Royal Mint make bumper profits from precious metals, with latest figures showing it is raking in £20million a year – a far more lucrative endeavour than any other arm of the business. Investors are turning to physical assets. While holding £100,000 worth of half ounce gold Britannia coins on a tray, it's easy to see why. Each of the half ounce coins is worth £1,290.81 at the time of writing and there are 77 per tray, worth £99,391.60 in total. There is also the weightier and more expensive 1oz version of the Britannia coin, which costs £2,549.41. But no coin will make it in or out of the Royal Mint's airport-style security. You must leave any coinage you have on you in a safe deposit box, and bags are scanned before entering and on leaving. The Royal Mint typically mints 300 gold bullion coins an hour, or 7,200 in a day. Around half these coins are shipped to trade partners in Asia, Europe and North America. It also recently invested in a Precious Metals Recover Facility, which opened in August 2024. Here the Royal Mint can extract up to half a ton of gold for every four tons of recycled RAM computer circuit boards it receives. A significant amount of the gold the Royal Mint sells comes via its buyback service where people can cash in on items at home. Most British customers buying bullion opt for either Britannia or Sovereigns, the Royal Mint's flagship offerings. These come in sizes ranging from 1/10 of an ounce to one ounce and cost between £244.70 for a single coin and £255,205 for a box of 100. Sovereign coins are 22k gold and Britannia coins are 24k gold. Stuart O'Reilly, market insights manager at the Royal Mint, says: 'Sovereigns are having a resurgence in popularity due to their unique weight and heritage and their more accessible price point. 'People are looking at smaller weights for a more affordable entry point into gold.' Due to surging interest, the Royal Mint says it is increasingly working with private banking intermediaries on behalf of clients. Andy Dickey says a typical customer now spends £2,000 on average with the Mint. But some ultra-high net worth gold bullion investors have £20million worth of gold held in the building's vaults. Core customers are men in their 60s but women now make up 25 per cent of the customer base, up from 10 per cent before 2020. And demand from Gen Z is also picking up, although these customers tend to buy fractional coins at a lower cost. The Royal Mint believes the gold rush will continue when it announces its sales figures later this month. Henk-Jan Rikkerink, global head of solutions and multi asset at Fidelity International, believes gold will continue to respond well to further geopolitical ruptures. He says: 'We're entering a phase where traditional safe havens like US assets can no longer shoulder global portfolios. Investors must actively rewire their allocations in line with shifts in geopolitics, inflation dynamics, and trade.' Gold investors should know that investment in gold bullion coins from the Royal Mint is not regulated by the Financial Conduct Authority. Buyers must also factor in delivery or secure storage costs. Some of the coins never leave the Royal Mint and instead go straight into its secure vault where those buying gold can store it. Around 35,000 customers currently store gold, silver or platinum in the Royal Mint vault, with individual holdings ranging from £20 to £20million. It costs between 1 to 2 per cent of the value per year, depending on product, and is charged quarterly. The Royal Mint also has a sustainable gold Exchange Traded Commodity which is listed on the stock market (ticker RMAU). This fund tracks the price of the metal by owning bullion, which is stashed in its vault. You can also purchase a fractional amount of gold bars held in the Royal Mint vault through digital gold.
