Healey reportedly rejects capital gains tax rise

The Chancellor, John Healey, has reportedly ruled out raising capital gains tax at next week’s Budget, according to the Financial Times and The Times. The tax applies to profits from selling assets such as shares and property.

Healey delivers his first Budget under prime minister Andy Burnham on 28 October. The Treasury did not confirm the reports.

A Treasury spokesman said: “As has always been the case, decisions on tax are a matter for the Chancellor to set out at fiscal events, rather than routinely commenting on rumour, speculation or proposals.”

According to the reports, Healey rejected an increase after being told it could cost the Treasury money if wealthy people leave the UK or defer selling assets. HMRC previously estimated that raising the higher rate by 10 percentage points could cut receipts by £3.6bn in 2028-29, a figure that reflects expected changes in taxpayer behaviour. Lord O’Neill of Gately, a former Goldman Sachs chief economist who has advised Burnham, opposed an increase.

Higher-rate taxpayers currently pay 24% on taxable residential property gains, while basic-rate taxpayers generally pay 18%, depending on income and the size of the gain. The additional rate of income tax is 45% in England, Wales and Northern Ireland. Healey had already dismissed proposals to align capital gains tax with income tax.

Several Labour figures had argued for a rise. Louise Haigh, the first secretary of state, and Wes Streeting, the defence secretary, both backed an increase before Burnham became prime minister, with supporters arguing it would narrow the gap between tax on investment gains and on earnings. Caitlin Boswell, deputy director at Tax Justice UK, criticised the reported decision as a missed opportunity.

The biggest revenue-raising measure reportedly planned is a higher rate on bank profits, expected to fund cost-of-living support for households and businesses. Healey stressed the importance of business profits in a speech last month, when he said:

“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.”

Industry reactions

Michael Healy, chief executive of IG Consumer, said: “Investing for the long term requires confidence that you understand the rules you’re investing under. But over the past decade, investors have faced repeated changes to investment taxes and rules. It’s not just changes that come into force that create uncertainty – investors also have to navigate proposals that are subsequently changed or dropped, let alone those leaked ahead of Budgets.

“Reports that the Chancellor has ruled out raising CGT are welcome and would send a much-needed positive signal to investors. The Government must now build on this by committing to a stable investment tax regime that gives more people the confidence to invest for the long term. This is also one of the best ways the Government can reduce reliance on the state and strengthen the UK’s fiscal position.”

Rob Morgan, chief investment analyst at Charles Stanley Direct, part of Raymond James, noted: “Chancellor John Healey ruling out a further increase to capital gains tax (CGT) will provide some reassurance to business owners and investors ahead of the Autumn Budget.

“The decision suggests the Treasury is increasingly focused on the risks of behavioural change rather than just the headline rate. Higher CGT rates can encourage investors to delay asset sales, potentially reducing the amount of tax ultimately collected.

“It also reflects broader concerns about economic competitiveness. At a time when the government is trying to encourage investment and growth, another rise in CGT could send the wrong message to entrepreneurs, business owners and investors.

“There are also lessons from the recent non-dom reforms too. Potential concerns that wealthy and internationally-mobile individuals may relocate have highlighted the need to consider behavioural responses alongside expected tax revenues. Against that backdrop, stability in the CGT regime may be seen as a more effective approach than further rate increases.”