Healey rules out capital gains tax rise in Budget

Summarised from 4 outlets · 7 reports · Updated 20 Oct, 09:02 · Archive

Chancellor John Healey has rejected calls from Cabinet colleagues to raise capital gains tax in the forthcoming Budget on 28 October. Ministers including Louise Haigh and Wes Streeting had previously lobbied for an increase to the current rate of 24 per cent for higher rate taxpayers and 18 per cent for basic rate taxpayers.

Healey decided against the move after warnings that it could ultimately cost the government money if wealthy individuals defer selling assets or move them out of the country, according to Treasury sources. Lord O'Neill of Gately, who has advised Prime Minister Andy Burnham and worked on the Northern Powerhouse project, told the Times that raising capital gains tax would send 'the wrong message to business'. Former adviser to Burnham and Goldman Sachs chief economist Lord Jim O'Neill stated it would send 'the wrong message to business'.

Capital gains tax is levied on the increased value of investments when they are sold. Earlier in the year, before Andy Burnham became Prime Minister, several senior Labour figures had suggested a route to equalising capital gains tax with income tax rates, where the base rate is 20 per cent and higher rate is 40 per cent.

The decision to rule out any increase leaves Healey with fewer revenue-raising options, given his commitment to the Labour manifesto to not raise VAT, national insurance or income tax. The Chancellor acknowledged that Britain finds itself in a 'tough' position ahead of the Budget and is reported to be downplaying the prospect of major revenue-raising measures.

The main revenue-raising measure in the Budget is now expected to be an increase in the tax rate that banks pay on their profits. This is widely expected to fund cost-of-living support for households and businesses.

In a speech last month, Healey said he wanted to prioritise wealth creation without it being constantly subject to penalties. He stated: '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.'

Meanwhile, Conservative leader Kemi Badenoch is due to warn the government to slash its spending plans and reduce its borrowing. She will urge Healey and Prime Minister Burnham to 'live within our means', and signpost the Tories' package of £70bn of cuts to spending.

How it is being reported

• Chancellor John Healey 'rules out increasing capital gains tax' in BudgetJohn Healey is said to have rejected calls for the tax to be hiked over fears it could lead to a loss of Treasury revenuesEvening Standard · 20 Oct, 09:30
• A modest increase in bank taxes is not the end of the world for lenders | Nils PratleyAs long as Healey doesn’t go overboard, a small turn on surcharge dial will not seriously undermine flow of capital Everyone is familiar with the banks’ plea: raising taxes on them amounts to taxing the nation’s growth. If you increase how much banks pay, goes the argument, less interest will be paid on deposits and loans will cost slightly more, meaning we’ll all be worse off eventually. In terms of economic theory, it’s coherent, it should be said: in an ideal world, a chancellor would strive to lower costs of capital at every opportunity. In the real world, however, John Healey faces…The Guardian · 20 Oct, 09:00
• Badenoch says Healey’s budget will be worse than Reeves’s if he doesn’t slash spending – UK politics liveConservative leader to give a speech later, while Treasury sources say Healey has ruled out a rise in capital gains tax Good morning. John Healey , the chancellor, is delivering his first budget a week tomorrow, and this morning there are two news developments that will help to frame the way it is received. The most important is on the front page of the Times, where Steven Swinford has a story firming up that has already been hinted that: that Healey has decided not to raise capital gains tax in the budget. This is significant because a capital gains tax hike was for a while seen as the…Guardian World · 20 Oct, 08:47
• Healey to reject calls to raise capital gains tax in budgetCabinet colleagues have previously called for an increase but chancellor feels it might ultimately cost the Treasury John Healey will not raise capital gains tax in next week’s budget, despite previous calls to do so from cabinet colleagues including Louise Haigh and Wes Streeting. The chancellor has decided that any increase might ultimately cost the Treasury if wealthy individuals defer the sale of assets or move them out of the country, according to Treasury sources. Continue reading...The Guardian · 20 Oct, 08:27
• John Healey rejects calls to raise capital gains tax at the BudgetThe Chancellor has faced a barrage of voices urging him to raise the tax, which applies to the profit made from selling off assets.Evening Standard · 20 Oct, 08:23
• John Healey rejects calls to raise capital gains tax in BudgetThe Chancellor has faced a barrage of voices urging him to raise the tax, which applies to the profit made from selling off assetsThe Independent · 20 Oct, 08:15
• John Healey rules out capital gains tax hike in BudgetJohn Healey has squashed speculation he will raise capital gains tax in the forthcoming Budget after rejecting calls from his Cabinet colleagues. The Treasury was facing lobbying efforts from top ministers, including Louise Haigh and Wes Streeting, to raise the capital gains tax (CGT) rate from its current level of 24 per cent for higher [...]City AM · 20 Oct, 07:28

In this story: John Healey · Louise Haigh · Wes Streeting · Andy Burnham · Lord O'Neill of Gately · Kemi Badenoch · United Kingdom

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