Treasury reviews capital gains tax but denies bid to pin coronavirus borrowing bill on wealthy

Chancellor Rishi Sunak
AFP via Getty Images
Luke O'Reilly15 July 2020

The Treasury has commissioned a review of capital gains tax as Chancellor Rishi Sunak looks to find a way of paying back the billions of pounds borrowed to support the economy through the Covid-19 crisis.

The Chancellor has asked the Office for Tax Simplification (OTS) to look at how capital gains tax (CGT) – a tax applied on profits on homes and other assets – is currently applied.

The review comes after the Office for Budget Responsibility said Government measures to address the impact of the virus would result in an “unprecedented peacetime rise in borrowing” this year, escalating to between 13 per cent and 21 per cent of GDP and reaching up to £322 billion.

The fiscal watchdog also warned that the UK economy might not recover from the pandemic until 2024.

But Treasury sources suggested there was no truth the review would be used to raise taxes and pin the borrowing bill on the wealthy.

Matt Hancock denied the Chancellor was looking to raise Capital Gains Tax
PA

A Treasury spokeswoman said: “It is standard practice to keep taxes under review.

“Over the last few years the OTS has reviewed most of the major tax regimes apart from CGT, and a review of CGT will now complete its review of all the major taxes.”

In a separate statement, a Treasury spokesman added: “There is no expectation or plans for policy changes as a result.”

On Wednesday morning Health Secretary Matt Hancock denied that the Chancellor is looking to raise capital gains tax.

Asked about reports the Chancellor is looking to raise capital gains tax, Mr Hancock told Sky News: “As far as I understand, there is no proposal and the Chancellor is not looking at tax changes now.

“We’ve just had the summer economic statement and apparently reviews like this are normal all of the time and not connected to any decision one way or the other.”