Hargreaves Lansdown is among four major UK investment platforms reported to have warned that a further increase in capital gains tax could discourage retail equity investment ahead of the Budget on 28 October. AJ Bell, interactive investor and Quilter are also reported to have raised concerns about the effect tougher CGT treatment could have on investment behaviour.
The warning lands against a policy backdrop in which the Government is trying to build a stronger retail investment culture and direct more household capital towards productive assets. That makes the tax debate particularly relevant for investment platforms, wealth managers and finance teams assessing how policy changes could alter customer behaviour.
Current CGT rates for individuals are 18% and 24%, depending on taxable income, while the annual exempt amount for the 2026-27 tax year is £3,000. Gains on investments held outside tax-efficient wrappers such as ISAs and pensions can therefore create a tax liability when assets are sold.
Hargreaves Lansdown has separately cautioned investors against making decisions purely on Budget speculation. In material published on 29 September, the platform said it had seen a modest increase in investors realising gains in Fund and Share Accounts ahead of the 2024 Budget when speculation about CGT changes intensified.
AJ Bell has also highlighted the behavioural effect of Budget uncertainty. The platform said on 24 September that speculation over higher CGT rates could encourage some investors to realise gains before 28 October, particularly where assets are held outside ISAs and pensions and gains are well above the £3,000 annual allowance.
Interactive investor has pointed to the scale of the tax already being collected. Citing HMRC data, the platform reported that CGT receipts reached a record £24.2 billion in the 2024-25 tax year, while the number of people paying the tax rose to 584,000.
Quilter has meanwhile questioned how much additional revenue further reform would generate. Its tax specialists noted in September that Treasury receipts were already rising under the existing system and argued that any further changes should be assessed against the way taxpayers may alter when they realise gains.
That behavioural effect is central to the debate. CGT is generally triggered when an asset is disposed of, meaning investors have some control over when gains are crystallised. A higher rate does not therefore translate mechanically into higher receipts if investors respond by delaying sales, changing portfolio structures or making greater use of tax-efficient wrappers.
For investment businesses, those shifts can have operational as well as tax consequences. Budget speculation can concentrate trading activity into a short period, increase demand for Bed and ISA or pension transactions and raise the volume of customer queries. Over a longer period, changes in investor preferences can also affect dealing volumes, assets held in taxable accounts and the relative demand for different investment products.
The wider policy tension is that the Government has already said it wants to encourage retail investment and improve returns for savers. Any CGT change would therefore be judged not only by the revenue it raises, but by its effect on the willingness of households to commit capital to investments outside tax shelters.
With no further CGT increase announced, finance teams cannot plan on the assumption that rates will change on 28 October. The warnings around Hargreaves Lansdown, AJ Bell, interactive investor and Quilter nevertheless show why investment platforms will be watching the Budget closely for any measure that changes the economics of holding and realising equity gains.
