UK executives have been “racing to sell shares” at a record rate as fears mount that Chancellor Rachel Reeves will raise capital gains tax at tomorrow’s Budget.
Last week, directors sold £29.8m of their companies shares, while only buying £4.1m, leaving a net £25.7m of stocks sold.
Meanwhile, over the last month, investors have sold £163.4m worth of shares, while only buying back £48.5m, a net sale of £114.9m, according to data from Graniteshares.
The trend has notably picked up over the last quarter, with the net shares sold by UK directors rising to £515.6m, up from just £95.1m in the first quarter of 2024.
While capital gains tax currently sits at 20 per cent for those selling their shares, speculation has spread that it could be hiked when the government lays out its fiscal plans on Wednesday, leaving UK bosses paying a heftier charge on the profit.
Only 350,000 people pay capital gains tax – around 0.65 per cent of the UK, but many of them are company directors that receive shares as stock compensation, often based on performance.
Shares bought and sold by UK company directors
2024Shares boughtShares soldNet shares boughtThird quarter£111.3m£626.9m-£515.6mSecond quarter£769.7m£1bn-£250.3mFirst quarter£218.4m£313.5m-£95.1mSource: Graniteshares
“Executives are no different from other investors, who are increasingly losing confidence in the UK market,” said Nick Saunders, CEO of stock trading platform Webull UK.
“A lower capital gains tax rate represents the increased risk of equity investments; if the rate increases, the incentive to invest in equities rather than bank accounts diminishes.”
Saunders noted that as the proportion of Brits owning UK shares has fallen to a record low of 10 per cent, it is likely to fall further as overseas investors, which own 58 per cent of the FTSE 100, will not suffer the same penalty.
“Our analysis reveals that company directors of UK listed companies are racing to sell shares ahead of a widely anticipated capital gains tax raid in tomorrow’s Autumn Budget,” added Will Rhind, founder and CEO of Graniteshares.