It is a truth universally acknowledged that a government in need of a fortune will override the fair treatment of its taxpayers. This truth is so fixed in the minds of all concerned that the government and its agents would doubtless consider the tax revenues so derived the rightful property of the state anyway.
With a little help from the first two paragraphs of Jane Austen’s favourite novel, this sets the scene for the strange case of HM Government, its taxpayers and capital gains tax (CGT) – arguably the tax most disliked by investors. Perhaps the tale is more the mystery of the missing billions than an Austen romance, and the government, so easily cast as the bounder, Wickham, is actually more the revolting yet useless Mr Collins. Anyway, let’s begin.
Obviously, the present-day government is desperately in need of a fortune, or at least the means to reduce the state’s burden of debt, which currently stands at £2,537bn, or 101 per cent of the nation’s annual output. In those circumstances, every little helps. While CGT is a minor tax – in 2022-23 it raised £18bn, or barely more than 2 per cent of the total tax take – its receipts are growing fast. Ten years ago, they were just £4bn and the Office for Budget Responsibility, the government’s spending watchdog, reckons CGT will raise £26bn in 2027-28.