UK shareholders face 60 per cent ‘wealth grab’ under Labour, warns City heavyweight Lord Lee
Shareholders face a 60 per cent raid on profits under Labour, City veteran and senior private investor Lord Lee of Trafford warned this morning.
Capital gains tax on shares sold outside an ISA is currently charged at 10 per cent or 20 per cent depending on your income tax band.
But the Liberal Democrat peer and former Thatcherite minister predicted that a Keir Starmer-led government would align capital gains tax (CGT) with income tax and introduce a new top rate of 60 per cent — dealing a massive blow to armchair investors and entrepreneurs alike.
Lord Lee told the Investing Reviews Podcast this morning that “the big danger from an investor’s point of view is that if you get a Labour administration with a substantial majority – even a moderate Labour administration – and it ends up being pressured by the left-wing of the party to tax more heavily those with money.”
“We would then get an increase in the top rate of income tax to 55-60 per cent and I think capital gains tax would rise to that figure also. So we would get a substantial increase in the level of capital gains tax.”
Lord Lee
“In my judgement, investors who are sitting on gains not protected in an ISA – or something similar – have to seriously think about taking their profit now, and taking the current lower capital gains tax on the chin rather than risking a Labour government two years down the track, when you could be paying a much higher rate of capital gains tax,” the City insider said.
In 2003, Lord Lee became Britain’s first ISA millionaire on contributions of just £126,200 made over 15 years. Earlier this year, HMRC revealed ISA millionaire numbers had grown to 2,000.
Lord Lee fears a future Chancellor may consider placing a ceiling on ISA savings, though he predicted the tax exemptions on money already invested would remain.
He said: “I can’t think there would be any changes retrospectively because ISAs were sold specifically as tax free wrappers and the outcry would be massive if the government tried to claw back the benefits retrospectively.
However, it may well be that an incoming Chancellor might restrict how much people can put into ISAs. That’s a different matter and a distinct possibility.”