As capital gains tax reforms loom, significant financial moves are underway.
- Conservative peer Lord Wolfson has sold 290,000 of his shares in Next, valued at £29.2m.
- Prior to the sale, Wolfson held 1.4 million shares, equating to a 1.2% stake in the company.
- Speculation arises concerning the timing of the sale, linked to expected changes in capital gains tax rates.
- Resultantly, Next shares have seen a 2% decline, reflecting market reactions.
In the wake of anticipated capital gains tax reforms, Conservative peer Lord Wolfson has moved to sell a substantial portion of his shareholding in Next. The transaction involved 290,000 shares, bringing in a valuation of £29.2 million. Previously, Lord Wolfson’s holdings amounted to approximately 1.4 million shares, accounting for a 1.2% stake that was valued around £141 million. The timing of this sale, amid discussions of potential alignment of capital gains tax (CGT) with income tax rates in the forthcoming budget by Rachel Reeves, has sparked considerable speculation.
Currently, the top rate for income tax stands at 45%, whereas CGT for similar taxable assets is 20%. For property, CGT can reach 24%. Basic-rate taxpayers face different numbers, with 10% on shares and 18% on property gains. Many investors are now expediting asset sales to potentially avoid higher future tax liabilities. “With many expecting CGT increases, we’ve seen a surge in asset sales in recent weeks,” noted Duncan Mitchell-Innes of TWM Solicitors, highlighting the prevailing sentiment among investors.
This marked the third instance of Lord Wolfson reducing his stake in the company, leaving him with shares valued at roughly £100 million. This decision followed a striking rally in Next’s share price, which saw a 123% surge since October 2022. Next’s performance has outshone its competitors, supported by a series of profit upgrades.
Furthermore, Next has recently elevated its profit forecast by £15 million, with pre-tax profits now anticipated to approach £1 billion, driven by expanding international sales. The retailer has credited evolving global fashion trends, incentivized by streaming services like Netflix and TikTok, as a key contributor to its escalating success.
The forthcoming fiscal policies have incited strategic financial decisions among investors, with Lord Wolfson’s share sale epitomizing the preparedness for potential tax rate adjustments.
