Submitted by Bill Fernie
20th October 2026
Reports that Chancellor John Healey may abandon plans to increase capital gains tax (CGT) have attracted attention ahead of the Budget on 28 October. For investors, landlords, farmers and family business owners across Scotland, the outcome could affect decisions about selling assets, passing on a business or planning for retirement.
However, there is an important qualification. The reports remain speculative. The Treasury has not formally confirmed that an increase has been ruled out, and the final decision will not be known until the Chancellor announces his Budget measures.
Reuters has reported on newspaper coverage suggesting that the Government is moving away from increasing CGT, including proposals to bring its rates closer to those charged on income. That may indicate a change of direction, but it is not the same as a confirmed policy decision.
Why the issue matters in Scotland
Capital gains tax applies to profits made when people sell or dispose of certain assets, including shares, second properties and business interests. The tax is generally charged on the gain rather than the entire sale price, subject to the relevant rules and reliefs.
Although tax policy is often discussed in Westminster-wide terms, the consequences are felt in local communities. Scotland has property owners, private landlords, farmers, investors and thousands of family-run businesses whose owners may eventually want to sell, retire or pass their interests to the next generation.
For a small business in Caithness or Sutherland, the value of the business may represent decades of work and much of the owner's retirement provision. A tax change could influence the timing of a sale or the amount left after the transaction.
A family farm presents another example. Its value may be tied up in land, buildings and business assets rather than cash sitting in a bank account. Succession planning can therefore involve difficult decisions about ownership, borrowing, investment and the future of the farm.
That does not mean every business owner would pay CGT on a sale. The tax treatment depends on the circumstances, and some transactions may qualify for relief. But uncertainty over future rules can complicate long-term planning.
The argument for raising the tax
Supporters of CGT reform argue that the tax system should treat different forms of income more consistently. Employees can pay income tax at rates well above the main rates of capital gains tax, while some people build wealth through assets rather than wages.
The current main CGT rates for individuals are generally 18% for gains falling within the basic-rate band and 24% for gains taxed at the higher or additional rate. Special rules and rates can apply to particular assets and circumstances.
Those who favour reform argue that increasing CGT could raise revenue and reduce the difference between the tax treatment of earnings and investment gains. At a time when governments face pressure to fund public services, that argument is likely to remain part of the debate.
For Scotland, the issue also sits alongside the wider question of how the tax system supports public services while encouraging investment and business development. The Scottish Government has devolved powers over certain taxes, including Scottish income tax on non-savings, non-dividend income, but capital gains tax remains a matter for the UK Government.
That distinction is important. Any change to CGT announced by the Chancellor would apply across the UK, including Scotland, even though Scotland has different income tax bands and rates for many taxpayers.
The case against an increase
Opponents of higher CGT rates warn that people may delay selling assets, reduce investment or make decisions about where to live and hold their wealth based on the tax consequences.
For Scotland, the concern is not confined to wealthy investors. If an owner delays selling a business, a potential buyer may miss an opportunity to expand, employees may face uncertainty and the business may have less scope to invest. In some circumstances, a sale can bring fresh capital and management into a local economy.
There is, however, no guarantee that leaving CGT unchanged will automatically produce more investment or jobs. Much depends on wider economic conditions, access to finance, customer demand and business confidence.
The Chancellor must therefore weigh the potential tax revenue against the possibility that higher rates could alter taxpayers' behaviour. The amount raised cannot be judged by simply multiplying a proposed rate increase by the existing tax base.
Are the reports reliable?
The recent media coverage suggests that the Government may have decided the risks of an increase are too great. But the reports do not establish that every possible CGT change has been abandoned.
The Chancellor could leave the main rates unchanged while altering particular reliefs, allowances or exemptions. He could also change his approach before the Budget is delivered.
Pre-Budget briefings can provide useful clues, but they can also reflect negotiations that are still under way. Until there is an official announcement, investors and business owners should avoid treating a reported decision as a certainty.
What should Scottish taxpayers do?
Anyone planning to sell a second property, shares, a business or other assets should consider the rules currently in force and seek professional advice before making a major decision. The right approach will depend on the asset, the size of the gain, the owner's circumstances and any reliefs available.
For family businesses, the Budget is also a reminder that tax planning should form part of wider succession planning. A will, ownership agreements and a plan for retirement or transfer can be just as important as the headline tax rate.
For Scotland's rural communities, where farms and small businesses can be central to local employment and family wealth, those decisions can have consequences beyond the individual owner.
The final answer will come on 28 October. Until then, the most accurate conclusion is that a CGT increase appears to be in doubt, but has not been definitively ruled out.
For Scottish investors and business owners, the distinction between a newspaper report and a confirmed Budget decision is more than a technicality. It could affect major financial choices, and those choices are best made on evidence rather than speculation.