Capital gains tax (CGT) receipts fell sharply last year, reinforcing concerns that higher taxes on investment gains are failing to deliver additional revenue while discouraging business activity.
New figures published by HM Revenue and Customs show CGT receipts totalled £13.646 billion in 2025, down from £14.900 billion in 2024 — a decline of 8.4 per cent.
Wealth managers said the fall suggests investors and business owners are increasingly deferring disposals in response to a tougher tax environment. Jason Hollands, managing director at Evelyn Partners, said the data highlighted the “futility of over-taxing investors”.
“This marked decrease indicates that taxpayers are swerving the crackdown on capital gains by sitting tight and delaying disposals,” he said. “History shows that when CGT is increased, investors either bring decisions forward ahead of changes or are deterred from crystallising gains afterwards — or both. In many cases, more aggressive taxation leads to lower, not higher, revenues.”
The figures come after successive reductions to the CGT annual exemption under the previous Conservative government, which cut the allowance from £12,300 in 2022–23 to just £3,000 in 2024–25. Hollands said the receipts data suggested the Treasury had seen little benefit from that move.
Final revenue figures show CGT raised £16.93 billion in 2022–23, falling to £14.50 billion in 2023–24 and £13.06 billion in 2024–25, with the latest data indicating that the downward trend is continuing.
“The main consequence appears to have been distortion and disincentives to investment and business decisions,” Hollands said.
Attention is now turning to the impact of CGT rate increases announced by Rachel Reeves in her first Budget on 30 October 2024, when higher rates came into effect immediately. Hollands said much of the impact of those changes has yet to appear in the data, as most capital gains, aside from property, are reported through self-assessment with a lag.
“January and February 2026 will be the key months to watch,” he said, adding that early indications did not bode well for hopes that higher CGT rates would significantly bolster the public finances.
Hollands warned that further increases, including proposals to align CGT more closely with income tax rates, would be counterproductive. “Taxing investors more heavily on gains from capital they have put at risk does not work as a revenue raiser,” he said. “What it does risk is discouraging entrepreneurialism and investment at a time when the UK needs both to drive growth.”
The latest data is likely to intensify debate within government over whether capital gains tax can realistically be relied upon as a long-term source of revenue — or whether repeated hikes simply encourage investors to stay on the sidelines.
