A financial services company warns that the Budget, which will be announced next week, could cause financial shock to investors.
Nigel Green, chief executive of DeVere Group, says that capital gains tax is due when assets like investment portfolios and property are sold.
The tax has traditionally been seen as a burden on the wealthy, but in reality, many workers will have to pay higher taxes. The government wants to raise £35 billion. This increase will be at the expense hardworking people, who have saved prudently for their future.
"The idea that this tax only affects the wealthy is outdated. This CGT increase will have a severe impact on middle-class families and entrepreneurs as well as expatriates. "People who have made sound financial decisions, such as investing in property or running successful businesses, will be penalized for doing so."
DeVere Group warns, in addition to the impact on families directly, that the CGT increases will have long-term significant consequences for the UK economy as a whole. The government could discourage the behaviour that is the driving force behind economic growth by increasing tax on investment returns.
Green says: "The changes proposed will have a chilling impact on investments." People will think twice about investing in businesses, pensions or property when they face higher taxes on their returns.
"At a moment when the UK needs to invest in new ventures that will generate growth, it is shortsighted and harmful to discourage people from investing their money."
He says that these changes send a troubling message to foreign investors, especially expatriates. They have supported the UK's economy for many years. Many will reconsider their financial commitment to Britain if they are threatened with higher taxes on UK-based assets.
"This is an unsafe precedent. The message that they are getting is that UK no longer welcomes overseas investment. The ripple effect could be huge, especially as global investors look for more favourable tax environment elsewhere."