Bosses cash in £1bn to avoid a Reeves capital gains tax raid

FTSE executives in ‘mad scramble’ to sell down stocks ahead of Budget

Executives at Britain’s biggest companies have sold more than £1bn of shares since the election was called, ahead of an anticipated capital gains tax raid by Rachel Reeves. 
Insiders at FTSE-listed companies have been racing to sell down stock in recent weeks, amid growing fears the Government could double the rate of tax paid when investments are sold. 
Senior leaders including chief executives and board members have sold £1.3bn worth of stock and acquired £297m between May 27, days after the election was called, and Friday Sep 27 — leading to net sales of £1bn, according to Telegraph analysis of figures from stockbroker AJ Bell.
The £1bn figure vastly outstrips the level of sales made in the months before the election was announced, when only a net £25m of shares were sold. The data covers sales made by executives of shares in their own businesses, rather than any external investments.
Examples of high-profile transactions include Next chief executive Lord Wolfson last month selling a £29m stake in the high street giant, while Dunelm deputy chairman Sir Will Adderley offloaded shares worth £114m in a bid to achieve “greater portfolio diversification”.
Other examples include a £1m share sale by Balfour Beatty finance chief Philip Harrison and Funding Circle founder Samir Desai’s move to sell a £5m stake in his business.
Directors typically face so-called lock-up periods that prevent them from selling stock until certain time periods have elapsed. They also face restrictions around offloading shares too close to financial reporting dates. This can often lead to spikes in share sales following half-year and full-year results seasons.
However, the £1bn figure is still highly unusual compared to recent years. The May-to-September total is more than 10 times the level of net sales made during the same period in 2023 and more than double the total in 2020 and 2021. In 2022, directors bought more shares than they sold, adding a net total of £37m to their holdings between May and September. 
It comes amid mounting speculation that the Chancellor could launch a capital gains tax raid when she delivers her maiden Budget on Oct 30. Capital gains is paid when shares are sold and is currently levied at a rate of 20pc on any profit. 
However, think tanks have urged Ms Reeves to equalise the levy with income tax, which for higher rate payers stand at 45pc. 
The Chancellor has said tax rises will be necessary to address what she claims is a £22bn black hole in the public finances. The Government has ruled out raising income tax, VAT and national insurance, making capital gains a likely target.
Tax advisers said fears about potential changes were fuelling an increase in executives selling shares, thereby crystallising their gains early to avoid higher tax bills after the Budget.
Nimesh Shah, the chief executive of accountancy firm Blick Rothenberg, said: “People are taking pre-emptive actions now. They are selling down positions they hold. Directors of listed companies will have a particular concentration of a particular stock.
“For people sitting on big gains, their concern is that capital gains will, at worst, be double. They are taking the opportunity to lock in the 20pc rate at today’s values. There is a mad scramble to get things done before the Budget.”
Next, Dunelm, Funding Circle and Balfour Beatty declined to comment when asked whether the sales were linked to capital gains tax.
Charles Hall, head of research at investment bank Peel Hunt, said people in the City had seen a noticeable increase in director sales.
“You can see a number of share sales that coincidentally are happening ahead of a Budget,” he said. “I’m sure we’ll be seeing a number of those over the course of the next month.” 
RSM tax partner Karen Clark, who advises FTSE 250 bosses on their personal finances, said more clients were asking her about the tax implications of the Budget. 
She said higher taxes were accelerating existing plans to sell down stakes.
Ms Clark said: “A lot of people are worried about whether the capital gains tax rate is going to increase on Budget day, or if they will have a window of opportunity if this change only comes in from April 6. People are nervous about it.” 
Selling too many shares at once is also frowned upon because it can spook investors who fear directors have less confidence in the business. Directors must also comply with company rules which force them to hold a certain number of company shares.
The week after the election was announced on May 22, a net total of £620m shares were sold by FTSE directors, according to AJ Bell, well above the average for the period.
AJ Bell director Russ Mould said: “It is common for directors to have part of their remuneration paid in stock and occasionally they will sell a portion to raise funds for personal needs, portfolio diversification or estate planning. It is possible that putative changes in the tax regime may be focusing a few minds.”
A government spokesman said: “We do not comment on speculation around tax changes outside of fiscal events.”