UK investment platforms warn of capital gains tax impact

Major UK investment platforms, including Hargreaves Lansdown, AJ Bell, interactive investor, and Quilter, have warned that potential increases to capital gains tax (CGT) ahead of the October 28 Budget could discourage retail equity investment. These platforms expressed concern that tougher tax treatment might alter investor behavior, particularly for assets held outside tax-efficient wrappers like ISAs and pensions.

Tax experts are suggesting that if the Chancellor increases CGT rates to replenish fiscal headroom, the move should be accompanied by inflation relief. Such a mechanism would ensure only profits exceeding price growth are taxed, which proponents argue would strengthen investment incentives and entrepreneurship. However, experts from firms such as Blick Rothenberg and BDO noted that reintroducing inflation relief would increase the complexity of the tax regime and the workload for HM Revenue & Customs.

Alternative proposals include an investment allowance or a tapering rate linked to the length of asset ownership, similar to the system used in France.