Healey rules out CGT hike as Budget looms

Chancellor John Healey has ruled out raising Capital Gains Tax ahead of next week’s Budget, Treasury sources confirm. The decision comes after Labour MPs Wes Streeting and Louise Haigh publicly urged a higher CGT rate before Andy Burnham took office as prime minister in July. Healey said the tax, which applies to profits from selling assets such as shares or second homes, will stay at the current levels – 18% for basic‑rate earners and 24% for those on higher or additional rates. He warned that lifting the levy could push wealthy investors out of the country or make them hold back sales, costing the Treasury in the long run. In a recent speech, Healey emphasized the need for Britain to be a “country of wealth creation”, urging policies that boost confidence, investment and corporate profit. Former adviser to Burnham and Goldman Sachs chief economist Lord Jim O’Neill cautioned that increasing CGT would send the wrong signal to business. Labour insiders have pushed for parity between CGT and income tax, arguing the current gap favours capital owners. Louise Haigh, once a close ally of the prime minister, suggested moving the CGT rate closer to income tax before becoming Burnham’s first secretary of state. Defence secretary Wes Streeting, after resigning from Sir Keir Starmer’s cabinet, called for a “wealth tax that works”. Banking leaders have hinted they expect the chancellor may target the sector for higher taxes after banks reported record profits, prompting union demands for more contributions. Meanwhile, Tory leader Kemi Badenoch is set to use a pre‑Budget speech to press for reduced spending and lower borrowing.

Context

CGT is part of the broader tax system that differentiates between income from work and returns on investments, a distinction often debated in UK fiscal policy. Changing the rate can affect investment decisions and government revenue streams.