UK’s Chancellor of the Exchequer John Healey has ruled out raising Capital Gains Tax at his first Budget, dealing a significant blow to left-wing Labour MPs who had urged the government to narrow the gap between rates on investment gains and earnings and exposing a sharp internal divide within Prime Minister Andy Burnham’s cabinet over the direction of economic policy.
Healey rejected calls to raise CGT in the Budget on 28 October, opting instead to prioritise economic growth and business investment, according to The Times. He ruled out the move after being warned that higher capital gains taxes could ultimately reduce government revenues if wealthy individuals left Britain or delayed selling assets.
The decision marks a pointed retreat from the ambitions of some of Labour’s most prominent voices, and tests the unity of a cabinet that took office only three months ago.
You Might Be Interested In
Capital Gains Tax UK: What Is Capital Gains Tax, And Why Has It Proved So Divisive?
Capital Gains Tax is levied on the profit an individual makes when selling an asset that has risen in value — including shares in a company, investment funds and properties that are not a primary residence. CGT is currently charged at 18% for basic-rate taxpayers and 24% for higher-rate taxpayers, and raised £24 billion in the 2025/26 tax year. That compares with income tax rates of up to 45% for the highest earners in England, Wales and Northern Ireland, and 48% in Scotland, a disparity that critics on the Labour left have long argued is fundamentally unfair, rewarding wealth over work.
The call for a sharp increase in CGT was backed by key allies of Prime Minister Andy Burnham, including First Secretary of State Louise Haigh, who called for it to be brought closer to income tax rates shortly before she returned to cabinet. Former Labour leader Neil Kinnock and Defence Secretary Wes Streeting had also urged Healey to equalise the tax rates.
The proposal was first put forward by Streeting in his leadership pitch in May 2026, under which three bands of CGT would be introduced, at 20%, 40% and 45% with a person’s band calculated by combining their annual income and the gains generated on assets.
Comments
0 commentsNo comments yet — be the first.