File image of Labour leader Keir Starmer and Shadow Chancellor of the Exchequer Rachel Reeves. Image © Keir Starmer.

The UK Budget next week could spell financial shock for hundreds of thousands of ordinary families, as Chancellor Rachel Reeves appears to be preparing to hike Capital Gains Tax (CGT).

This tax hike, warns the CEO of one of the world’s largest financial organisations, threatens not only individuals’ wealth but also the country’s economic health.

Nigel Green, CEO of deVere Group, highlights the widespread impact of such a move, explaining: “Capital Gains Tax is due on profits made from the sale of assets such as investment portfolios, property, and businesses. Traditionally, it’s been seen as a levy on the wealthiest, but the reality is that many everyday workers will be dragged into paying higher taxes.”

Green continues to stress that the effects of the proposed CGT rise will be felt by more than just the wealthy elite. He says: “As the government aims to raise up to £35bn, this increase will come at the expense of hardworking people who have prudently saved for their futures.”

The outdated notion that CGT is exclusively a tax on the rich is harmful says Green: “Ordinary middle-class families, entrepreneurs, and even expatriates will be severely impacted by this CGT hike. People who have responsibly planned for their retirement, invested in property, or run successful businesses are set to be penalised for making sound financial decisions.”

Currently, basic rate taxpayers face a 10% CGT rate, while higher earners pay 20%. An anticipated rise could erode savings and investments for millions across the UK. The very families who have carefully planned for their future may see their wealth chipped away by higher taxes.

Impact on Economic Growth and Investment

Beyond the direct financial burden on families, deVere Group warns of the long-term economic consequences. By increasing the tax burden on investment returns, the government risks stifling the kind of behaviour that drives economic growth.

“The proposed changes will have a chilling effect on investments,” Green warns. “When people face higher tax bills on their returns, they’ll think twice before investing in property, pensions, or businesses. At a time when the UK economy desperately needs fresh investment to recover from recent economic headwinds, discouraging people from putting their money into growth-generating ventures is short-sighted and harmful.”

Green points out that these changes also send troubling signals to overseas investors, including expatriates, who have long supported the UK economy. The threat of higher taxes on UK-based assets may prompt many to reconsider their financial commitments to Britain.

“This is a dangerous precedent,” he says. “International clients are watching closely, and the message they’re getting is that the UK is no longer as welcoming to overseas investment. The ripple effects could be immense, particularly as global investors seek more favourable tax environments elsewhere.”

Budget's Broader Implications

The upcoming Budget is expected to introduce a series of tax hikes, but it’s the potential changes to CGT that are likely to have the greatest impact on families’ financial security.

Green concludes: “While the government aims to fill a £22bn hole in public finances, the real cost will be borne by ordinary people who have worked hard to build their future. This CGT hike risks undermining the very foundations of financial prudence and investment that are so essential to the country’s economic well-being.”