Healey rejects plan to raise capital gains tax to income tax rates

Summarised from 2 outlets · Updated 13 Oct, 14:57 · Archive

Chancellor John Healey has rejected calls to equalise capital gains tax with income tax rates, citing investor concerns.

Chancellor John Healey has rejected calls from senior Labour figures to raise capital gains tax (CGT) to the same level as income tax. The proposal would have seen CGT for top-rate taxpayers nearly double from 24 per cent to 45 per cent. Several cabinet ministers and left-leaning think-tanks including the Institute for Public Policy Research had argued the move could generate substantial revenue for the Treasury.

Treasury officials warned Healey the increase would backfire. According to HM Revenue and Customs estimates, a ten-point rise in the higher rate of CGT would lead to a loss in revenue of more than £3.5 billion a year as investors took steps to avoid paying the tax. Officials also raised concerns that a sharp increase in CGT could discourage investment at a time when the government is trying to encourage it. One Treasury insider told the Daily Mail the numbers 'just don't add up'.

The decision comes as Healey faces a fiscal challenge ahead of his Budget on 28 October. The Institute for Fiscal Studies has warned of a £35 billion shortfall in the government's spending plans. Healey is also reportedly reconsidering other tax proposals, including plans to lower the threshold for the Mansion Tax from £2 million.

How it is being reported

• Labour forced to ditch 'bat s**t crazy' wealth tax plan after Treasury officials warn Chancellor it would backfire and cost the government billionsThe Chancellor has been examining Labour demands to raise rates of capital gains tax (CGT) to the same level as income tax.Daily Mail · 13 Oct, 14:45
• Healey rejects calls to equalise capital gains and income tax ratesChancellor John Healey has reportedly rejected calls by senior Labour figures to raise capital gains tax to the same levels as income tax, after warnings that an increase would harm Britain’s appeal to investors. Several senior cabinet ministers have in recent months called for capital gains tax (CGT) to be equalised with income tax in [...]City AM · 13 Oct, 12:57

In this story: John Healey · Wes Streeting · Labour · HM Revenue and Customs · Institute for Public Policy Research · Institute for Fiscal Studies · Britain · UK

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