A record £8.2 billion was paid in Capital Gains Tax in 2017/18 - over £1 billion more than the year before.
The figures comes from private wealth law firm Boodle Hatfield which has analysed HM Treasury’s CGT figures for 2017-18, the latest available data.
The yield means that the government’s CGT income has risen by 130 per cent in just five years.
Boodle Hatfield says the overall rise has been driven by increasing asset prices, including both equities and property.
The FTSE 100 rose a cumulative 24 per cent from January 2016 to December 2017 while the average UK house price increased 7.3 per cent from £197,044 to £211,433 over the same period according to the Nationwide.
Recent restrictions on tax relief for buy to let investors, introduced in April 2017, may also have encouraged more owners of investment properties to sell and triggered a rise in CGT yield.
Until April 2017, owners of rental properties could deduct the full value of their mortgage interest payments from their rental income before paying tax on it. This relief is gradually being taken away by HMRC – at present only 25 per cent of the mortgage interest payments can be deducted, falling to zero in April 2020.
Boodle Hatfield says that this has made BTL investment significantly less attractive for some individuals, resulting in some landlords reducing the size of their portfolios.
Geoffrey Todd, Partner at Boodle Hatfield, says: “HMRC seems to have reaped the benefit of the Treasury making buy-to-let a much less attractive investment – twice over. As well as reducing the amount of tax relief the government gives to property investors, the changes to buy to let taxation seem to have pushed some landlords into selling properties and driven up CGT yields too.”
He says that with asset values having risen sharply in recent years, CGT is becoming an increasingly important source of income for HMRC. Its income from CGT has more than doubled in the past five years.