Hunt's dividend and CGT 'tax raid' unlikely to skew investor behaviour

Healthy demand for income funds

Jeremy Hunt’s proposed cuts to the dividend and capital gains tax (CGT) allowance have been received by the industry as a "two-pronged attack" to investment portfolios, both toward investments geared towards income and those focused on capital growth.

However, analysts and wealth managers told Investment Week that the changes to the UK tax regime are unlikely to skew investor behaviour or mark a wholesale shift in portfolio construction.  From 2023, dividend tax allowance will be halved, falling from £2,000 to £1,000 and to £500 from 2024, while the annual capital gains exemption will fall from £12,300 to £6,000, and then to £3,000 from April 2024. Charles Incledon, client director at Bowmore Asset Management, described the changes as a "double whammy" against investors, while AJ Bell head of personal finance Laura Suter said the m...