Lord Wolfson Sells £29m Stake in Next Amid Anticipated Capital Gains Tax Changes
In a significant move that has caught the attention of investors and market analysts alike, Lord Wolfson, the chief executive of retail giant Next, has sold a £29 million stake in the company. This decision comes just ahead of expected changes to the capital gains tax (CGT) system, which are anticipated to be unveiled in Chancellor Rachel Reeves’s maiden Budget next month.
Details of the Sale
Recent filings reveal that Lord Wolfson offloaded 290,000 shares between Friday and Tuesday, bringing his total stake down to approximately 1.1 million shares, valued at around £100 million. Prior to this sale, he held about 1.4 million shares, which represented a 1.2% stake in Next, worth approximately £141 million. Following the announcement of the sale, Next’s shares experienced a 2% drop, reflecting the market’s reaction to the news.
Speculation Surrounding CGT Changes
The timing of Lord Wolfson’s sale has sparked speculation regarding potential changes to the CGT system. Chancellor Rachel Reeves is expected to target CGT in her upcoming Budget, with suggestions that it may be aligned more closely with income tax rates. Currently, higher earners face income tax rates of up to 45%, while CGT rates for assets like shares stand at 20% and 24% for property gains. Basic-rate taxpayers are subject to 10% and 18%, respectively.
As the prospect of increased CGT looms, many investors are rushing to sell assets to avoid potential tax hikes. Duncan Mitchell-Innes of TWM Solicitors noted a noticeable surge in asset sales in recent weeks, driven by the anticipation of CGT increases. This trend is underscored by HMRC’s report of the highest August CGT receipts since 2008, with £197 million collected from landlords and investors looking to offload assets.
Lord Wolfson’s Shareholding History
This latest sale marks the third time Lord Wolfson has reduced his shareholding in Next. Despite the recent offloading, he still retains a substantial stake worth around £100 million. His decision to sell comes on the heels of a remarkable rally in Next’s share price, which has surged by an impressive 123% since October 2022. This growth has been attributed to a series of profit upgrades and a robust performance that has outpaced many of its competitors in the retail sector.
Next’s Strong Performance
Next has been experiencing a notable upswing in its financial performance, bolstered by a series of profit upgrades. Earlier this month, the retailer raised its profit forecast by £15 million, projecting pre-tax profits to reach just under £1 billion. This growth has been fueled by increasing international sales, as the company capitalizes on the convergence of global fashion tastes. Trends popularized through streaming services like Netflix and TikTok have played a significant role in driving Next’s success, allowing the retailer to tap into a broader audience.
As the retail landscape continues to evolve, the implications of Lord Wolfson’s sale and the anticipated changes to the CGT system will be closely monitored by investors and market analysts. The decisions made in the upcoming Budget could have far-reaching effects on investment strategies and the overall market climate in the UK.