As nervousness grows that Rachel Reeves will announce an increase in capital gains tax (CGT) in the upcoming autumn budget, here's how other countries compare with the UK on their rates.
Speculation has been rife that the chancellor will raise CGT rates in the budget on 30 October, with the Guardian reporting last week that she had considered hiking it as high as 39%.
However, prime minister Keir Starmer dismissed the suggestion that rates would be raised that high, in an interview with Bloomberg Television at the UK's International Investment Summit in London on Monday.
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“A lot of speculation is getting pretty wide of the mark,” said Starmer. When asked specifically on that 39% figure, he said this was "getting to an area which is wide of the mark", but did not offer any more detail.
It is expected that Reeves could still announce some form of increase in CGT, particularly given the fact that she has ruled out raises in other areas, such as value added tax (VAT) and the main rates of income tax.
CGT is levied on the profits made from selling assets, including a second property, shares and business assets. Rates of CGT in the UK range from 10% to 20% on assets not including residential property and "carried interest" gains, which refers to share of profits paid to the manager of an investment fund.
On profits made from sales of a second residential property, the rate ranges from 18% to 24%. For carried interest, the rate starts at 18% and goes up to 28%.
That's still much lower than the higher rate of income tax, which starts at 20% for basic-rate payers to 45% for those on the additional rate band.
Where does the UK stand in relation to other nations regarding CGT?
Capital gains rates in different countries
Firstly, it's important to note that CGT rates are applied in different ways in different countries.
Denmark has a top CGT rate of 42%, which is one of the highest in the world. That rate applies to income made on shares above DKK61,000 (£6,813), below that level the CGT rate is 27%.
Other Nordic countries with higher rates of CGT include Norway, which has a tax rate on gains shares and dividends is nearly 38%. Finland has a capital tax rate of 30%, which rises up to 34% if the portion of taxable capital income exceeds €30,000.
Similarly, France has a 30% flat rate on capital gains made on shares, with an additional 4% for higher earners.
In Ireland, the CGT rate for most gains is 33%, though it can rise to 40% for gains on foreign life policies and foreign investment products.
In the case of Sweden, CGT stands at 30%, though a profit on property is taxed at 22% with eligibility for deductions if sellers have paid interest on loans or mortgages in the year.
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Capital gains generated from the transfer of assets in Spain are taxed on a progressive rate of between 19% and 28%, while Italy has a headline CGT rate of 26% for individuals.
In Germany, Europe's largest economy, there is a flat rate of 25% in CGT. However, there is also a 5.5% solidarity surcharge, which was introduced in 1991 to meet the costs of the German unification.
Across Europe, the average rate of CGT on listed shares is 17.9%, according to the Tax Foundation think-tank.
Looking over to the US, the Internal Revenue Service (IRS) said the tax rate on most capital gains should be no higher than 15% for most individuals. It then rises 20% for an individual with taxable income above the threshold of $492,300.
A rate maximum of 28% can apply in certain cases, such as selling collectibles, including coins and art.
Ahead of the US election, current vice president and Democratic presidential candidate Kamala Harris has proposed a long-term CGT rate of 28% on the people earning $1m or more, though that was still below president Joe Biden's suggestion of a rate of 39.6%.
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Dan Coatsworth, investment analyst at AJ Bell, said that there is "speculation that Trump might push for either 15% or maintain the rate at its current 20%.
"A rise in capital gains tax rates could trigger a wave of selling on the stock market if wealthy investors seek to avoid paying higher rates once the new president gets into power," Coatsworth said. "That might be a short-term event rather than the sign of things to come."
Fears around a potential CGT hike in the UK have also sparked some concern around the offloading of assets ahead of the budget.
Last week, the Financial Times reported that executives have been ramping up their sales of shares in UK companies.
Data compiled by AJ Bell showed that directors in listed companies had sold a total of around £440m in shares since the general election on 4 July, at an average rate of £31m each week. That's compared with an average pace of £14m a week in the previous sixth months.
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