Capital gains tax (CGT) receipts have surged to £19.7 billion in the first two months of 2026, according to new figures from HM Revenue and Customs. The total marks a dramatic 73% increase compared with £11.4 billion collected during the same period last year.
The spike has drawn attention from economists and wealth managers, with many pointing to structural changes in the tax system as well as investor behaviour ahead of expected policy shifts.
Investors Rushed to Sell Assets Before Tax Changes
Experts suggest the surge was largely driven by investors selling assets before anticipated increases in CGT rates. These payments relate to the 2024/25 tax year, before changes introduced in the October 2024 Budget took effect.
Jason Hollands of Evelyn Partners said many investors moved early to avoid higher taxes, particularly as speculation grew that rates could be increased further to align with income tax levels.
This wave of pre-emptive selling significantly boosted tax receipts, as more gains were realised within a shorter timeframe.
Frozen Thresholds Increase Tax Burden
A major factor behind the rising tax take is the sharp reduction in the CGT tax-free allowance. The annual exemption has been cut from £12,300 in 2022/23 to just £3,000 by April 2024.
This means far more of each gain is now taxable, increasing the overall burden on investors. With limited protection remaining, even modest asset sales can generate significant tax liabilities.
Experts say this “fiscal drag” effect has quietly expanded the tax base without increasing headline rates.
Lower Allowance ‘Turbo-Charged’ Revenues
Hollands noted that the reduced allowance has “turbo-charged” CGT revenues, particularly when combined with increased selling activity.
With investors rushing to offload assets and a smaller tax-free buffer in place, the Treasury has seen a substantial rise in receipts over a short period.
However, analysts caution that this may not represent a long-term trend, but rather a temporary spike driven by timing and behavioural changes.
Previous Trends Show Mixed Impact
Interestingly, historical data suggests that cutting the CGT allowance alone does not always increase revenues. Receipts actually fell from £16.93 billion in 2022/23 to £13.06 billion in 2024/25.
This indicates that investor behaviour plays a key role, with tax receipts heavily influenced by when individuals choose to realise gains rather than just the rates themselves.
Pressure Mounts on Investors Amid Wider Tax Changes
The surge in CGT receipts comes at a time of broader tax changes and increased scrutiny from HMRC. Investors are facing tighter allowances, potential future rate rises and ongoing economic uncertainty.
Wealth managers warn that individuals should carefully plan asset disposals and consider tax implications, as the combination of lower thresholds and policy shifts continues to reshape the investment landscape.
