Notting Hill’s capital gains higher than northern cities

RESIDENTS in Notting Hill received more in capital gains than the combined population of Liverpool, Manchester and Newcastle, analysis shows.

Meanwhile, the Royal Borough of Kensington and Chelsea accounted for 3pc of the UK’S capital gains between 2015 and 2019, more than in Wales – despite Kensington’s population being 30 times smaller, a report by the University of Warwick and London School of Economics (LSE) has found.

The paper, which looked at anonymised tax records, found that capital gains are highly concentrated in the South of England and also among wealthy taxpayers.

Less than 3pc of adults paid capital gains tax over the 10 years to 2020. Three in every £7 of gains went to individuals earning more than £150,000.

Andrew Lonsdale, research officer at LSE’S International Inequalities Institute, said: “Continuing to tax these gains at a lower rate than earnings from work is the complete opposite of ‘levelling up’.” Chris Etherington, of tax firm RSM, said upping the rates could “materially change” the behaviour of those facing the levy. This could result in a drop in revenue for the Treasury.

“A large proportion of capital gains tax is paid by those with capital gains over £5m and such individuals may have the option of simply choosing not to sell an asset if the tax rate is unappealing. We have seen in the past that individuals can be motivated to explore moving overseas to tax-friendlier shores when there are rumours of capital gains tax rate increases.

“Perhaps that has been more of an empty threat in the past but it is easier than it has ever been to work remotely now and for entrepreneurs to look at breaking UK tax residency.”

The bulk of the gains – nearly 70pc – came from the sale of business assets, according to the paper.

A capital gain is defined as the profit made on the sale of an asset such as a business or property. If the gain exceeds the taxpayer’s annual allowance, then the seller must pay capital gains tax at a rate of 18pc or 28pc for property and 10pc or 20pc for other assets, depending on whether they are a basic rate or higher rate taxpayer.