UK Chancellor John Healey has decided against raising Capital Gains Tax (CGT), dismissing calls from some Labour MPs to increase the levy, according to sources reported by the Times. The move represents a significant decision as the government prepares next week's Budget, when major tax and spending announcements are typically made. CGT is charged on profits when people sell assets that have risen in value, such as shares or properties that are not their main homes. Currently, the tax is levied at 18% for basic rate income taxpayers and 24% for higher and additional rate payers.
Healey's decision follows warnings that raising CGT could prove counterproductive. HM Treasury estimated last year that lifting the higher rate of CGT by 10 percentage points would reduce government receipts by £3.6bn in 2028-9, meaning the policy could ultimately cost the Treasury money. Goldman Sachs Chief Economist Lord Jim O'Neill warned that such a move would send "the wrong message to business". The chancellor has also ruled out equalising CGT with income tax rates, according to the Financial Times.
The decision marks a reversal for some government figures who previously backed higher CGT. Cabinet ministers Wes Streeting and Louise Haigh both supported raising CGT before Andy Burnham became prime minister in July. Haigh, now secretary of state, had suggested capital gains should rise closer to income tax levels. However, Healey signalled his approach last month when he spoke about the importance of profit-making for businesses. "I want to see this country as a country of wealth creation. I want our government decisions and policies to raise the levels of confidence, and investment, and profit in British business," he said.
Healey's position on CGT contrasts with expectations for other tax areas. Senior banking executives have told the BBC they expect the chancellor to raise taxes on the financial sector, where firms have reported substantial profits. Meanwhile, Conservative leader Kemi Badenoch is expected to urge the government to cut spending and reduce borrowing, signalling plans for £70bn in cuts including to welfare and overseas development aid. For savers and investors in the UK, the decision to maintain CGT at current rates means capital gains will continue to face taxation at 18% or 24% depending on income levels.