Reeves can't squeeze the pips till they stop squeaking

It will take more than jacking up capital gains tax to plug the chancellor's £22bn black hole, explains James Moore

- James Moore

Is the government planning a capital gains tax raid? The possibility that, in her first Budget later this month, chancellor Rachel Reeves will push the rates into the stratosphere has created quite the tizzy - and prompted fierce government denials.

In advance of 30 October, we're already seeing more leaks than Thames Water in a hot summer. The fuss over CGT has been caused by reports that the chancellor is considering pushing it up to as much as 39 per cent for higher-rate payers.

While an increase to that level has been pooh-poohed by the government, that doesn't mean some sort of rise is off the table. Au contraire. And it could be quite a biggie. Why is this a problem? Before we get to that, it makes sense to run through how this tax - which only a minority of Britons will ever encounter works.

CGT is paid on any profits made by selling assets over and above a threshold of £3,000 (this year). Think second homes, stocks and shares, even art. How much you pay depends on what you're selling and what your tax rate is. Basic-rate income taxpayers are supposed to surrender 10 per cent on gains from most assets, 18 per cent on residential property such as a holiday home (your primary residence is exempt).