Streeting and Haigh pushed for higher CGT before joining Burnham cabinet
UK Chancellor John Healey has informed Treasury officials he is minded not to increase Capital Gains Tax in next week’s Budget, according to people familiar with the discussions. The position, first reported by the Times, runs against public calls from two of his most senior cabinet colleagues for the levy to be aligned with income tax rates.
Healey’s stance reflects warnings that an increase could backfire financially: that wealthy taxpayers could leave the UK or defer asset sales in response to a higher rate, reducing rather than raising revenue.
Defence Secretary Wes Streeting called for a “wealth tax that works” in May, shortly after resigning as a minister in former Prime Minister Sir Keir Starmer’s government. First Secretary of State Louise Haigh, a key ally of the prime minister, had suggested before Andy Burnham became prime minister in July that capital gains rates should rise closer to income tax rates. Influential Labour figures had pushed for equalising CGT and income tax, with the former generally attracting a lower rate.
Lord Jim O’Neill, Goldman Sachs’ chief economist and a former adviser to Burnham, said raising CGT would send “the wrong message to business.” Healey has previously indicated he wanted the UK to be a country of wealth creation, with government policy lifting confidence, investment and profit. The Financial Times separately reported that Healey had already ruled out levelling the two tax rates.
In a pre-Budget speech scheduled for Tuesday, Conservative leader Kemi Badenoch is expected to urge the government to drop its spending plans and reduce its borrowing.