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John Healey, Chancellor of the Exchequer, has rejected calls from certain Labour MPs to increase Capital Gains Tax (CGT) in his upcoming Budget. Despite some senior Labour figures previously advocating for a rise in CGT, Healey has made it clear that no such increase will be implemented. CGT is a tax applied to the profit earned when individuals sell assets that have appreciated in value, including shares or properties that are not their main homes.
Among those who had backed raising CGT before Andy Burnham took office as prime minister in July were cabinet ministers Wes Streeting and Louise Haigh. However, Healey’s decision follows concerns reported by the Times that raising CGT could backfire financially if wealthy individuals relocate overseas or delay selling their assets to avoid the higher tax. Healey has expressed a desire for the UK to foster wealth creation, emphasizing government policies that encourage confidence, investment, and profitability.
Andy Burnham has also encountered advice against increasing CGT. Lord Jim O’Neill, a former adviser to Burnham and Chief Economist at Goldman Sachs, warned that such a move might “send the wrong message to business.” Nonetheless, some influential members within Labour had pushed for aligning CGT rates more closely with income tax since CGT often benefits from lower rates. Louise Haigh, a strong supporter of the prime minister and now his first secretary of state, had previously advocated for raising CGT to be nearer to the income tax rate. Similarly, Wes Streeting, who stepped down from a ministerial role under former Prime Minister Sir Keir Starmer, called for a “wealth tax that works” earlier this year.
Healey has firmly dismissed the notion of equalizing capital gains and income tax rates, as reported by the Financial Times. Meanwhile, in other political developments preceding the Budget, Tory leader Kemi Badenoch plans to push the government to reconsider its current spending and borrowing strategies during a speech scheduled for Tuesday
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