Speculation about higher capital gains tax has become something of an autumn tradition. Every year since Labour took office, the prospect of an increase has resurfaced, with plenty of Labour MPs backing the idea. Usually, the rumours have outpaced the changes, although the rise to 24% in October 2024 was certainly real. This year, I think there is more reason to pay attention.
The public finances help explain why. The Chancellor, John Healey, will deliver his first Budget on Wednesday 28 October. He has pledged to work within the existing fiscal rules while keeping the manifesto promise not to increase National Insurance, the main rates of Income Tax, or VAT. With the three biggest tax levers off limits, wealth taxes come into sharper focus. CGT has also delivered a record haul: HMRC collected £22.2bn in 2025–26, comfortably exceeding the previous peak of £16.9bn in 2022–23. The OBR attributes some of that increase to disposals brought forward before the October 2024 Budget.
The proposal attracting the most attention is full alignment with income tax. Wes Streeting initially championed it during his leadership bid in May. Although he subsequently left the contest, he remains close to Andy Burnham. Drawing on research from the Centre for the Analysis of Taxation (CenTax), Streeting and other influential Labour voices called it a "wealth tax that works".
That would mean replacing the current 18% and 24% CGT rates with income tax rates of 20%, 40% and 45%. The Treasury is reportedly examining potential increases, but opinion is divided over how extensive any changes might be. Saltus sees full equalisation as unlikely, favouring the prospect of narrower measures such as reducing exemptions or tightening reliefs. Rathbones, by contrast, considers another CGT rise one of the more plausible Budget rumours.
Why, then, has alignment not happened already? In brief, HMRC's own figures indicate that it could reduce revenue. Official analysis quoted by the Centre for Policy Studies suggests that adding 10 percentage points to the higher rate would leave the Treasury £3.6bn worse off in 2028–29. Using HMRC's published methodology, IG calculates that full equalisation could cut annual receipts by around £7.8bn once changes in taxpayer behaviour are included.
The explanation is straightforward: people sitting on substantial gains become less willing to sell. Rather than crystallise a large tax bill, they keep the asset and leave the gain on paper. Think of a toll road. Push the toll high enough and motorists take another route, or decide not to travel.
This is why the more developed proposal involves a wider package rather than a rate increase alone. CenTax combines equal rates with an investment allowance, the abolition of the uplift at death, a charge on gains when someone leaves the UK, and more favourable loss treatment. In an update published on 23 September, it estimates that the package would increase CGT receipts by 62%, or £19.7bn in 2029–30, even allowing for behavioural changes.
For anyone thinking about their estate, the death uplift is the element I would watch most closely. Currently, gains on assets retained until death are effectively erased because the assets are rebased to their value at that point. Raising rates without changing that treatment gives owners an even stronger reason to hold on until death. Raising rates and removing the uplift takes that route away altogether.
To illustrate the difference, we calculated six examples using two scenarios. The "Today" column follows the rules in place now. The "Aligned" column leaves the existing mechanics unchanged but applies rates of 20%, 40% and 45% to gains.
The calculations use the 2026/27 bands for England, Wales and Northern Ireland, together with the £3,000 annual exempt amount. Gains sit on top of taxable income and, under the current approach, do not reduce the personal allowance. We assume shares and portfolios are held outside an ISA or pension, as gains within those wrappers are exempt from CGT.
Example | Income | Gain | Today | Aligned | Extra | Effective rate |
Shares sale | £30,000 | £20,000 | £3,060 | £3,400 | +£340 | 15.3% → 17.0% |
Second home sale | £80,000 | £285,000 | £67,680 | £124,015 | +£56,335 | 23.7% → 43.5% |
Retiree sells portfolio | £30,000 | £700,000 | £166,064 | £304,211 | +£138,147 | 23.7% → 43.5% |
Buy-to-let gifted to child | £60,000 | £200,000 | £47,280 | £84,765 | +£37,485 | 23.6% → 42.4% |
Business sale, BADR kept | £80,000 | £2,000,000 | £419,280 | £628,650 | +£209,370 | 21.0% → 31.4% |
Business sale, BADR removed | £80,000 | £2,000,000 | £419,280 | £895,765 | +£476,485 | 21.0% → 44.8% |
Amounts are rounded to the nearest pound. The effective rate expresses tax as a proportion of the entire gain. Each example assumes a single owner making the disposal within one tax year. The 45% rate applies once taxable income, after the personal allowance, together with gains exceeds £125,140. The annual exempt amount is allocated to the gains facing the highest rate, while retained BADR gains are assumed to absorb the 40% band first. The second home was bought for £250,000 and sold for £550,000, with £15,000 of allowable costs.
The table highlights two very different experiences. For basic-rate taxpayers, alignment would make relatively little difference. For those with gains above the basic rate band, the marginal rate would move from 24% to either 40% or 45%. In the larger examples, the effective rate approximately doubles, rising from below 24% to between 42% and 45%. The exception is the founder retaining BADR, whose effective rate reaches 31.4%.
The gift is the case that often catches people out. Transferring an asset to someone other than a spouse or civil partner, or a charity, is normally treated as a disposal at market value. The parent therefore faces tax on a £200,000 gain despite receiving no money from the transfer.
There is an important qualification to the founder examples. Business Asset Disposal Relief currently provides an 18% rate, with a £1 million lifetime limit. Whether that relief would remain under alignment is an open question. CenTax's calculations assume both BADR and Investors' Relief disappear, as reflected in our second founder example. Yet even Streeting has acknowledged that "genuine" entrepreneurs should face lower CGT rates. We have therefore included both possibilities.
These calculations also have limits. They tax nominal gains, meaning that a second home owned for twenty years appears much more profitable than it would after adjusting for inflation. Addressing that distortion is precisely what an investment allowance is intended to do. We have excluded reliefs other than BADR, and these figures are not applicable to Scottish taxpayers.
We have used 20%, 40% and 45% because those are the rates proposed by Streeting and CenTax. However, property and savings income will be taxed at 22%, 42% and 47% from April 2027. Applying those rates would take the second-home tax bill to £129,655.
Above all, there is no published design yet. If a future aligned regime treated gains as income when tapering the personal allowance, most of these overall tax bills would increase by around £5,000 to £5,700. Some of that additional charge would be income tax rather than CGT.
The cases above are familiar ones, but plenty of other ordinary transactions can also amount to a disposal for CGT purposes. Any rate change could affect:
Exchanging one cryptocurrency for another, or using cryptocurrency to pay for something.
Switching funds or rebalancing holdings within a general investment account.
Selling shares obtained through employee arrangements, including EMI options or growth shares.
Winding up a company through a members' voluntary liquidation.
Transferring assets to a former spouse after the post-separation no gain/no loss window has ended. Transfers made under a formal divorce agreement or court order are not subject to a time limit.
Selling a home that qualifies for only partial exemption, perhaps because it was rented out, used for business, or has extensive grounds.
Disposing of inherited assets that have increased in value since the date of death.
Selling farmland or land with development potential.
EIS tax treatment depends on individual circumstances and may change. Speak to a registered Independent Financial Adviser if you're unsure whether EIS is a good fit for your personal circumstances.
A further declaration before going any further: we manage EIS funds, so it is entirely reasonable to approach this section with a degree of scepticism. I will keep to HMRC's rules and allow those to speak for themselves.
The Enterprise Investment Scheme has four features relevant to this discussion:
i. Income tax relief. Up to 30% income tax relief on investments of up to £1 million a year, increasing to £2 million where the additional amount goes into knowledge-intensive companies. Shares must be held for three years, relief is withdrawn if the company loses qualifying status, and relief is capped at the investor's income tax liability.
ii. Tax-free growth. Exemption from CGT on gains from EIS shares held for at least three years, provided income tax relief was claimed on those shares and has not been withdrawn.
iii. CGT deferral. Deferral of gains on other assets where those gains are reinvested in EIS shares.
iv. Loss relief. If shares are sold at a loss, the loss (less any income tax relief received) can be set against income at the investor's marginal rate, or against capital gains.
Alignment would have the biggest effect on deferral. A gain arising on any asset can be deferred where qualifying EIS shares are issued during the period running from one year before to three years after the disposal. What matters is the share issue date, not when you subscribe to a fund.
Consider the second-home example again. If the disposal happened after alignment, reinvesting £100,000 of the gain could defer £45,000 of tax, because the highest slice of that gain would face the 45% rate. Under the current rules, the deferred tax would be £24,000.
There could also be up to £30,000 of income tax relief, although the amount available cannot exceed the investor's income tax liability. For our investor earning £80,000, that liability is approximately £19,400, so some of the investment might need to be treated as belonging to the previous tax year. Deferral itself does not require income tax relief, but shares on which that relief is not obtained also lose the CGT exemption on their growth.
Property introduces a timing complication. CGT on a residential disposal must be paid within 60 days of completion, whereas an EIS deferral claim cannot be submitted until the EIS3 certificate has arrived. Where a fund invests over a year or longer, the practical result is usually that the investor pays the tax and claims it back later.
However, it's important to note that deferral delays the tax bill; it does not preserve the current rate. HMRC's helpsheet explains that the deferred gain becomes chargeable again in the tax year when the EIS shares are sold, with that year's annual exempt amount available to offset it. The rates applying at that later date are therefore the ones that matter.
If rates have increased, the deferred gain faces the higher charge. For someone disposing of an asset before any change takes effect, that is a genuine trade-off. Deferral means exchanging a known 24% rate for an uncertain future rate, and settling the bill immediately could prove cheaper.
At least the claim offers flexibility. It can apply to only part of a gain, and the deadline falls five years after the 31 January following the tax year in which the shares were issued. There is no need to make the decision on Budget day.
For estate planning, the position on death is particularly significant. Under current rules, a deferred gain is not brought back into charge if the investor dies while holding the EIS shares, though inheritance tax may still apply.
That treatment, however, depends on the rules remaining unchanged. CenTax specifically proposes closing the death and emigration gaps that allow deferrals to become exemptions. A deferred gain disappearing on death is exactly the sort of outcome it has in mind, so I would not build a plan around that surviving a comprehensive reform.
EIS shares may also qualify for Business Relief from inheritance tax after they have been held for at least two years. From 6 April 2026, the relief is 100% on the first £2.5 million of combined business and agricultural property, and 50% on amounts above that. Shares traded on AIM receive only 50% relief. Any unused allowance can transfer to a surviving spouse or civil partner.
SEIS takes a different approach. Its reinvestment relief provides an exemption rather than a deferral, covering the lower of 50% of the gain or 50% of the SEIS subscription. Shares must be held for at least three years. That allows up to £100,000 of gain to be exempted. The gain must arise in the same tax year for which the SEIS income tax relief is claimed.
None of these benefits alters the underlying investment risk. Early-stage businesses are high-risk, difficult to sell, and frequently fail. That is why our Access EIS portfolios contain 30 or more companies rather than a small handful. Since 2013, SyndicateRoom has invested over £84m across more than 380 portfolio companies (as at September 2026).
Nor should we assume the reliefs would remain untouched in a wider reform. The Institute for Fiscal Studies has argued that higher CGT rates would also require changes to venture capital schemes, otherwise use of those schemes could grow substantially.
My view is that full alignment in isolation remains unlikely, largely because calculations using HMRC's own methodology suggest it would cost revenue rather than raise it. A more selective reform seems more credible: removing the lower rate, restricting BADR, or revisiting the uplift at death. A package combining several changes is another possibility.
Blick Rothenberg is right to warn against making major decisions solely in response to pre-Budget rumours. My addition would be that the better moment to understand your choices is before 28 October, rather than afterwards.
For anyone considering EIS or SEIS under the current rules, SyndicateRoom has four funds open, with closing dates on either side of the Budget, as set out below. Investing before 28 October does not guarantee today's rules, and that is worth keeping firmly in mind. Our team can arrange a call to explain how the funds work. We can't give personal financial or tax advice, so you may want to speak to an adviser about your circumstances.
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