As the Autumn Budget approaches, the government must be mindful of the impact of speculation on taxpayers’ financial decisions, warns Quilter’s tax and financial planning expert Shaun Moore.
HM Revenue & Customs’ latest figures have revealed a capital gains tax system generating record revenues, with liabilities reaching £24.2 billion in 2024/25 and taxpayer numbers hitting an all-time high.
However, HMRC highlights that speculation ahead of the October 2024 Budget prompted some investors and business owners to bring forward disposals.
Moore said: “As ministers consider options ahead of this year’s Budget, they should study these figures carefully. They are a reminder that taxpayers do not sit still and wait for reforms to happen. If significant tax changes are heavily signalled in advance, people will often act before they take effect, accelerating transactions, restructuring investments or bringing forward financial decisions.
“While that can create a short-term boost in revenues, it can also simply pull activity forward, leaving a weaker pipeline of future transactions and making tax receipts harder to predict. Importantly, many of these decisions cannot easily be reversed.”
Moore has urged governments to be prudent when discussing potential tax changes ahead of a Budget, noting that while testing the public mood is “understandable,” repeated speculation can have real-world consequences for financial behaviour, investment decisions and ultimately the tax revenues policymakers are trying to forecast.
According to Quilter’s own research, three in five (61%) retirees who withdrew tax-free cash from their pension ahead of last year’s budget regret doing so. Based on a survey of 5,000 UK retirees, 57% withdrew tax-free cash ahead of the budget and of those, 41% did so in anticipation of possible rule changes.
Main image: UK, parliament, jacob-diehl-d80dS3gesa8-unsplash
