Capital gains tax is highly dependent on equity markets, and geopolitical risks highlight the fragility of the UK fiscal system.

Golden Ten Data reported on March 4 that UK Chancellor Reeves' budget plan is facing a significant threat of stock market correction, as the outbreak of war in the Middle East has triggered a sharp decline in the stock market, making the fiscal outlook turbulent. The UK Office for Budget Responsibility stated that, of the £12 billion increase in government revenue expected for the 2030-31 fiscal year, three-quarters are attributed to a series of tax increases driven by the previous stock market rebound. Although the regulator submitted an overall optimistic forecast to Reeves in Tuesday's Spring Budget update, it also warned that the revenue growth brought by the stock market is "highly susceptible to reversal due to falling stock prices." According to its forecast document, a 10.3% drop in the stock market would result in a £10 billion reduction in tax revenue for the 2030-31 fiscal year. The Institute for Fiscal Studies (IFS) also emphasized this threat. The OBR assumes that the UK stock market in the first quarter is 8% higher than the forecast made last November. IFS Director Helen Miller said on Wednesday: "As we have seen in recent days, stock market gains may be fleeting. As the proportion of capital gains tax in total tax revenue rises, we become more vulnerable to fluctuations in asset prices."