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The benefits of a stamp duty holiday could be undone overnight

Finally, we have an inkling of how the Government's coronavirus spending bonanza will be paid for. Chancellor Rishi Sunak gave a clear hint at where his axe may fall last week when he ordered a review of Britain’s historically low rates of capital gains tax.

Any tweaks to the duty could spell very bad news for investors and homeowners. It offers some very valuable reliefs – including the exemption from the 28pc levy that applies to people selling their main home – which could be in line for being simplified or scrapped, depending on the results of the review.

Pundits have made many suggestions of how the tax may be changed. One is to bring the main CGT rates in line with income tax, meaning additional-rate taxpayers would pay a 45pc levy when cashing in investment gains. This would be a huge hike from the current 28pc.

Another is to scrap the nine-month tax-free period between buying a second home and selling a main home. Even more dangerous would be to abolish the 0pc rate of CGT for people selling their main home. This would undo many of the benefits of the temporary stamp duty holiday. Here, reporter Harry Brennan calculates what the cost of each potential change could be to you.

True, the tax is due an overhaul. As head of personal finance Lauren Davidson argues, it is far too complicated and contains a whole host of exemptions – some of which make sense (homes) and others less so (wine and cars).

Some campaigners say that, rather than increasing rates, the baffling levy should be abolished entirely. Currently CGT raises less than 9bn a year from just 300,000 people, making up less than 1pc of Treasury income. Yet it creates significant administrative costs for HM Revenue and Customs.

The Treasury has denied that the review is a first step towards raising taxes. However the 1 trillion that will be spent this year on the coronavirus pandemic will have to be paid for somehow. And with tax cuts on stamp duty and VAT, No 10’s coffers are likely to be looking rather thin.

Finally, a quick reminder that we have launched our Fantasy Fund Manager league. It's a free-to-play stock picking game, where you can try out your skills with the chance of winning 20,000. It's not too late to sign up. Find out how to play here.

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