Jeremy Hunt warns CGT rise would be ‘terrible for the economy’

Former chancellor and Conservative MP Jeremy Hunt has warned that raising Capital Gains Tax would be “terrible for the economy”, arguing that increasing the rate beyond 24% would reduce tax revenues as investors change their behaviour.

Speaking on IG’s The Art of Investing podcast, Hunt urged policymakers not to pursue higher CGT rates, saying the economic consequences would outweigh any short-term political gains.

Jeremy Hunt, former chancellor and Conservative MP, said: “It would be terrible. And it doesn’t matter if you’re left or right, don’t do it. If you increase your Capital Gains Tax above 24%, you will get less revenue, not more, because investors will change their behaviour.”

Hunt continued: “They won’t sell their assets, they’ll move their assets abroad, they’ll move abroad themselves. And you will get less money, not more. So if you’re a left-wing government that wants to raise more money to redistribute it to poorer areas or to put it into public services, don’t do this because you’ll get less money for the things that you care about.

“If you’re a centre-right government that wants to encourage enterprise and wealth creation, obviously don’t do it because you’re going to discourage precisely the thing that will make the economy dynamic and successful.”

Hunt also addressed recent research by IG suggesting the UK’s £100,000 tax cliff edge is discouraging people from taking on additional work and building wealth.

Between £100,000 and £125,140 of income, workers progressively lose their personal allowance, creating an effective marginal tax rate of 62%, while parents earning above £100,000 also lose eligibility for free childcare worth thousands of pounds each year.

Hunt said: “We’ve got this crazy situation where some people tell their bosses, ‘I don’t want to earn £100,000 – leave my salary on £99,000,’ because they’re better off being able to claim their free childcare and not deal with this tax cliff edge.