Chancellor John Healey rejects Capital Gains Tax increase before Budget

Chancellor John Healey has ruled out raising Capital Gains Tax (CGT) as the government prepares next week’s Budget, rejecting a campaign from several Labour MPs who have urged the rate be lifted to match income‑tax levels. The decision was announced on BBC Breakfast and comes after internal pressure from figures such as Wes Streeting and Louise Haigh, both of whom backed a CGT hike before Andy Burnham became prime minister in July.

The move reflects growing concerns that a higher CGT could drive wealthy investors out of the UK or discourage them from selling assets such as shares and second homes. Labour ministers had argued that equalising CGT with income tax would make the system fairer, shifting the tax burden from labour to capital. Burnham’s former adviser, Lord Jim O’Neill of Goldman Sachs, warned that a rise would send “the wrong message to business”. Healey, speaking last month, stressed the need to nurture “wealth creation” and boost confidence in British enterprises, positioning the tax debate within a broader push to support self‑employed people and profit‑making firms.

Under current rules, basic‑rate taxpayers pay 18 % on capital gains, while higher‑ and additional‑rate earners pay 24 %. HMRC estimates that a 1 % rise in the lower rate could generate about £5 million by 2028‑29, but a 10 % increase for higher earners would cut Treasury receipts by roughly £3.6 billion in the same period, especially if investors change behaviour by moving abroad or holding assets longer. Louise Haigh, now Burnham’s first secretary of state, argued in the Renewal journal that raising CGT would “shift the taxation burden away from punishing work, and towards unproductive capital accumulation”. Wes Streeting, who previously called for a “wealth tax that works”, echoed the sentiment that the current system penalises work.

The chancellor’s stance sets the tone for the upcoming Budget, where the government is expected to focus on measures that encourage investment rather than increase tax pressure on capital gains. Labour’s push for parity may re‑emerge as a point of contention in Parliament, but for now the Treasury appears committed to keeping CGT unchanged, signalling to markets that the UK will not impose new levies that could deter asset sales. The decision will be watched closely by investors, property owners and the broader public as it could shape fiscal policy and wealth distribution in the years ahead.