Financeupdated 1h ago2 min read
John Healey Rejects Calls To Raise Capital Gains Tax In First Budget
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Healey rejects raising capital gains tax in his first Budget. Cabinet ministers Wes Streeting and Louise Haigh backed a CGT rise previously.
Healey rejects CGT rise
John Healey rejected calls to raise capital gains tax in his first Budget, ruling out lifting CGT after warnings it could end up costing the government money if wealthy people left the country or deferred selling off assets. Healey dismissed the proposal as he prepared to hand down his first Budget, with Cabinet ministers Wes Streeting and Louise Haigh previously voicing support for raising CGT before Andy Burnham became prime minister in July.
Healey framed the decision around his stated aim for Britain to be a country of wealth creation, saying government policies should lift confidence, investment and profit in British business. Lord Jim O’Neill of Gately, who advised Burnham and worked on the Northern Powerhouse project, warned that “raising capital gains tax would send very much the wrong message to business.”
Budget revenue focus
The Budget’s biggest revenue raising measure was described as an increase in the rate banks pay on their profits, expected to fund cost-of-living support for households and businesses. The Times said Healey would implement a “steady as she goes” budget on October 28 rather than huge packages of tax rises and public spending, and it said the biggest “revenue raiser” would be a tax raid on banks.
The Times reported that Healey would reduce the government’s fiscal headroom from £23bn to around £15bn as he set out his approach to capital gains. Kemi Badenoch was scheduled to warn the government to slash its spending plans and reduce its borrowing at the Budget, and she would urge Burnham and Healey to “live within our means.”
Public, politics, and stakes
The Guardian Series said pre-Budget polling by Ipsos found that 67% of the public believe Healey is doing neither a good nor bad job, and it said 65% of the public is expecting some form of tax rise at the Budget. The Times reported that capital gains tax is charged at 24 per cent for higher-rate taxpayers on profits from the sale of assets compared with up to 45 per cent for income tax.
The Times said HM Revenue & Customs previously estimated that raising the higher rate of capital gains tax by 10 percentage points would reduce tax receipts by £3.6bn in 2028-29, due to behavioural impacts. Kemi Badenoch accused Healey on Tuesday of “burying his head in the sand” as she criticised Labour over rising public spending, saying “Labour have increased spending by more than £100bn in just two and a bit years.”