HM Revenue & Customs revealed an 89% increase in capital gains tax receipts compared with the previous year, the highest annual capital gains receipt since 1987.

HMRC said that 584,000 people paid capital gains tax, which was a 45% increase compared with the previous year, highlighting the impact of Labour’s policies to plug gaps in the public finances by raising the tax rate.

The then-Chancellor of the Exchequer Rachel Reeves raised the rates of capital gains tax in her 2024 Budget to between 18% and 32%, an increase from the previous rate which was between 10% and 28%.

The annual CGT allowance was cut from £6,000 to £3,000 in 2024/25 bringing more smaller investors into scope. It was also the first time crypto was recorded separately, revealing that 17,600 people reported gains of £1.38bn, with the majority of them aged between 25 and 44. Gains of at least £1m were reported by 240 people.

HMRC stated that the increase in the capital gains tax rate, consecutive yearly reductions in the tax-free allowance and the increase in business asset disposal rates from April 2025 all contributed to the record level of tax receipts.

They stated that £127bn in total gains were reported, an 82% increase from the previous year. The revenue office revealed that 45% of capital gains tax came from people who made gains of £5m or more, representing less than 1% of all capital gains taxpayers.

Sarah Coles, head of personal finance at AJ Bell, said: “A perfect storm of rate hikes, allowance cuts and endless speculation sparked an eye-watering spike in capital gains tax in 2024/25. Capital gains tax has gone from being a tax relatively few people had to worry about to something more mainstream, with the number of people paying CGT more than doubling in five years.

“Speculation ahead of the Budget in Autumn 2024 worried investors into realising gains ahead of the speech. Many of them will have sold assets they would otherwise have realised gradually – taking advantage of the annual allowance – because they were so concerned about potential changes.

“The Budget speech then brought miserable news for investors. For those making investment gains (excluding property), the rate rose from 10% to 18% for basic rate taxpayers and from 20% to 24% for higher rate taxpayers overnight.

“Former chancellor Rachel Reeves also announced that the rate on business assets would start rising from April 2025 – with the hiking of the rate on sales qualifying for business asset disposal relief. It forced some business owners to fast-track a sale: during the year, 8% of CGT came from sales that qualified for this rate.

“Some of these capital gains tax tweaks have hit those on average incomes harder. Basic rate taxpayers saw a much bigger leap in their CGT rate than higher rate taxpayers. The shrinking of the annual allowance has also had a disproportionate effect on smaller investors, because the allowance used to cover a much larger percentage of their gains.”