As we approach the Autumn Budget on 28 October 2026, it is difficult to ignore some of the rumours and speculation that are making headlines in the media.
Once again, we hear speculation about the possibility of changes to pension taxation – although with the seismic changes already scheduled for April 2027, when most unused pension funds and death benefits come into scope for Inheritance Tax (IHT), hopefully they will be left alone this year.
Individual savings account (ISA) changes are also scheduled for April 2027, when the cash ISA subscription limit falls to £12,000 for those aged under 65, and so it seems unlikely that there would be further changes in the near term.
What has not gone away is the call for higher taxes on wealth. Most of the attention is on capital gains tax (CGT) – a tax that has already seen significant changes to both its rates and its annual exempt amount in recent years.
What the latest figures show
HMRC’s 2026 CGT statistics, published in August, show record gains and CGT liabilities for 2024/25. The annual exempt amount was cut from £12,300 to £6,000 in 2023/24 and then to £3,000 in 2024/25, and the number of CGT taxpayers rose by 45% to 584,000 in 2024/25:
The allowance cuts are only part of that story. HMRC estimates that the two reductions brought up to 163,000 taxpayers into scope for 2024/25, but between them these taxpayers reported only £1.1bn of gains and £108m of tax. The larger effect was on those already paying CGT, with around £4.8bn of additional gains charged overall.
We also saw an increase to the main rates of CGT from 10% and 20% to 18% and 24% for disposals made on or after 30 October 2024. Shown below are the historic rates alongside the corresponding CGT liabilities for the relevant year:
CGT liabilities rose by 89% to £24.2bn in 2024/25, on gains of £127bn. HMRC does not quantify how much of this is due to the higher rates applying for part of the year, as opposed to taxpayers bringing forward disposals to beat those same rate rises. It also points to the pre-announced increases in the Business Asset Disposal Relief rate (to 14% from April 2025 and 18% from April 2026) and the cut in the residential property higher rate from 28% to 24% from April 2024 as contributing factors. What is clear is that a significant part of the 2024/25 spike reflects one-off changes in behaviour rather than a new baseline.
So, what new changes are being talked about?
Looking at the above chart, it would be easy to believe that simply increasing the rates of CGT will generate additional revenue. A range of possibilities has been suggested, from a modest rise in the current rates to full alignment with income tax rates. There are also renewed calls to remove or restrict the CGT uplift on death, under which assets are rebased to their market value at the date of death with no CGT charge.
Nothing has been confirmed. However, when the main rates last changed, the new rates applied to disposals made on or after Budget Day itself, and anti-forestalling rules were introduced for certain unconditional contracts entered into before Budget Day but completed afterwards. One should not assume there would be any lead-in period this time.
Planning considerations
This speculation gives rise to a number of financial planning considerations that you may wish to explore:
Review unrealised gains: identify clients with significant unrealised gains and model the impact of different outcomes, including full alignment with income tax rates.
Timing of disposals: for CGT, the date of disposal is the date of the contract (the trade date for listed investments), not settlement. If any change took effect from Budget Day, disposals would need to be made no later than 27 October 2026.
Weigh up the costs: crystallising a gain now means paying tax with certainty, and earlier, to guard against a change that may not happen. For older or seriously ill clients, it also gives up the uplift on death if that survives the Budget. Time out of the market and dealing costs should also be considered.
The 30-day rule: where the same shares or units are repurchased within 30 days, the ‘bed and breakfasting’ rule matches the sale with the repurchase, so the gain is not crystallised at current rates. Buying back through an ISA, a pension or a spouse or civil partner, or into a similar but not identical fund, avoids this.
Bed and ISA and Bed and Pension: consider bringing forward any planned arrangements, within the £20,000 ISA subscription limit and the pension annual allowance (including any tapered annual allowance or money purchase annual allowance) and relevant UK earnings for tax relief.
Use allowances and losses: make sure the 2026/27 annual exempt amount and any available losses are used and consider no gain/no loss transfers between spouses and civil partners to make use of both annual exempt amounts and basic rate bands.
As ever, decisions should be driven by the client’s wider objectives, individual circumstances and the rationale for acting ahead of an unconfirmed change , should a decision be made to do so, should be recorded.
What it could mean for investment bonds
Any increase to the rates of CGT will affect the tax analysis that compares directly held investments with an onshore or offshore bond. Directly held investments are taxed each year on dividends and interest, and CGT can arise whenever holdings are sold or switched. One of the many features of investment bonds is that they allow investors to defer personal tax on the underlying investments until a chargeable event gives rise to a chargeable gain, and switches within the bond do not give rise to a personal tax charge. With an offshore bond, the underlying fund largely rolls up gross; with an onshore bond, the life company pays tax within the fund, and the gain comes with a non-reclaimable basic rate tax credit.
This deferral is most valuable where the investor’s tax rate is lower when the gain is realised – for example in retirement, or by assigning segments to a lower rate taxpayer. However, bond gains are taxed as savings income, so neither the CGT annual exempt amount nor the lower CGT rates are available. From 6 April 2027 the savings rates of income tax rise to 22%, 42% and 47%, and the onshore bond tax credit rises from 20% to 22%, so the further tax payable by a higher or additional rate taxpayer on an onshore bond gain is unchanged.
If CGT rates are aligned with income tax rates, the rate advantage that direct holdings currently enjoy would largely disappear, and the deferral, control and top-slicing features of investment bonds would strengthen their tax appeal for a much wider range of investors. This would be even more so if the CGT uplift on death were also removed, as bonds do not benefit from it – on the death of the last life assured, the gain on the bond is taxed as income.
All information is based on our understanding and interpretation of applicable law and regulation which is subject to change. Tax treatment depends on individual client circumstances and may change in the future.