Next’s Lord Wolfson sells a £29 million stake ahead of expected changes to capital gains tax, triggering investor caution.
- Shares in Next fell by 2% following the announcement; the company remains silent on Lord Wolfson’s sale of 290,000 shares.
- Upcoming budget plans by Rachel Reeves are expected to align capital gains tax with income tax rates, potentially leading to increased taxes.
- The market has seen a wave of asset sales in recent weeks as investors brace for potential tax hikes by the UK government.
- This is the third time Lord Wolfson has reduced his shareholdings in the company, now valuing his stake at approximately £100 million.
Lord Wolfson, the CEO of Next, has recently sold 290,000 shares in the company, which has a total value of £29.2 million. This sale has drawn significant attention due to its timing, as it comes just before anticipated reforms to capital gains tax in the United Kingdom. Currently, capital gains tax rates for higher earners stand at 20% for assets such as shares and 24% for property gains; these are markedly lower than the 45% rate on income. The speculation is that the upcoming Budget, led by Rachel Reeves, may aim to harmonise these rates, increasing the tax burden on higher earners who benefit from capital gains.
Following the sale, shares in Next fell by 2%. The company has not issued any comments regarding the transaction. This silence has not diminished investor concerns; on the contrary, it has fuelled further speculation about potential tax reforms and their implications for asset holders.
As a strategic move, many investors have been offloading assets to sidestep the anticipated tax hike. Duncan Mitchell-Innes from TWM Solicitors highlighted this growing trend stating, ‘With many expecting CGT increases, we’ve seen a surge in asset sales in recent weeks.’ This sentiment is supported by recent data from HMRC, which reports record capital gains tax receipts in August, totalling £197 million. A considerable portion of this came from landlords and investors keen to liquidate before the fiscal changes come into play.
This recent transaction marks the third instance in which Lord Wolfson has downsized his stake in Next. Following an impressive rally in the company’s stock, which has seen values surge by 123% since October 2022, Wolfson’s remaining holdings are valued at approximately £100 million. Next has significantly outperformed many of its peers, driven by a sequence of profit upgrades. Earlier forecasts were revised, with expectations of nearly £1 billion in pre-tax profits, largely credited to soaring international sales and a global convergence in fashion preferences influenced by digital trends from platforms such as Netflix and TikTok.
Given the potential tax changes, asset liquidation strategies are becoming increasingly common among high-net-worth individuals.
