Understanding Capital Gains Tax Discrepancies

Capital gains tax is charged on the profit made from the sale of assets, yet its scope has stirred debate regarding its impact on revenue and economic stability. Contrary to a claim made by a Conservative MP, around 350,000 to 400,000 individuals actually pay capital gains tax each year, refuting the notion that only 12,000 do. This tax typically raises about £15 billion annually, accounting for less than 2% of the overall tax revenue, but increasing the rates might not yield expected benefits. Due to behavioral responses, such as delaying sales to avoid higher taxes, simply raising rates could result in a decrease in revenue instead of an increase.