The chancellor has asked the Office for Tax Simplification (OTS) to look at the tax, which comes into effect when assets that have increased in value are sold.

Mr Sunak, who is due to be questioned by MPs on the Treasury Committee today, has asked the OTS to consider whether the current capital gains rates are “fit for purpose”.

In a letter to the OTS, Sunak wrote: “I would like this review to identify and offer advice about opportunities to simplify the taxation of chargeable gains, to ensure the system is fit for purpose and makes the experience of those who interact with it as smooth as possible, as set out in the agreed terms of reference.”

“This review should identify opportunities relating to administrative and technical issues as well as areas where the present rules can distort behaviour or do not meet their policy intent.

“In particular, I would be interested in any proposals from the OTS on the regime of allowances, exemptions, reliefs and the treatment of losses within CGT, and the interactions of how gains are taxed compared to other types of income.”

A source from the Treasury has downplayed the likely impact of the review, telling The Times: “It is standard practice to review taxes and CGT is one of the few taxes that has not yet been reviewed. There is absolutely no expectation anything substantive will come out of this in terms of policy change. CGT reform is not in our sights.”

Nevertheless, the review comes as the Treasury grapples with the rapidly increasing cost of the coronavirus relief measures including the expensive furlough scheme.

According to the latest report from the Office for Budget Responsibility, the UK Government is set to spend £192 billion on measures to fight the economic and medical impact of the virus, marking an increase from last month’s estimate of £132.5bn.

At the same time, the OBR has predicted that UK GDP will plummet by at least 10.6% in 2020 marking its worst decline in 300 years.

Yesterday, Scottish Financial News reported that GDP dropped by 19.1% in the three months to May this year during the lockdown period.

• Read all of our articles relating to COVID-19 here.