Healey resists a capital gains rise

Chancellor John Healey is resisting calls to raise Capital Gains Tax in the Budget, according to BBC reporting based on sources familiar with the discussion, a choice that matters well beyond Westminster because it tests how far a Labour government is willing to chase revenue by taxing wealth more heavily.

The argument is not obscure bookkeeping. Capital Gains Tax applies to profits made when an asset is sold for more than it cost, including shares and property that is not a main home. In the UK, basic-rate taxpayers pay 18%, while higher- and additional-rate taxpayers pay 24%.

Some senior Labour figures had previously argued for pushing that rate closer to income tax. Louise Haigh had backed an increase before joining Andy Burnham’s government, and Wes Streeting had called for a “wealth tax that works” while outside office. Healey, by contrast, has signalled that he wants policy to encourage “wealth creation” and protect business confidence.

According to the BBC, ministers were warned that raising the tax could backfire if wealthy investors left the UK or simply delayed selling assets. That is the practical tension in almost every capital gains debate: the Treasury is not taxing a salary that arrives predictably every month, but a transaction people may postpone, restructure or move around.

HMRC’s own estimate, cited by the BBC, suggests a 10 percentage-point increase in the higher rate of Capital Gains Tax would reduce Treasury receipts by £3.6 billion in 2028-29. That does not settle the politics of fairness, but it does explain why a tax rise that sounds straightforward can become fiscally awkward.

The decision, if confirmed in the Budget, would also mark a boundary for Burnham’s government. Labour has faced pressure to ask more from those with assets, while also trying to reassure companies and higher earners that the UK is not becoming hostile to investment. Healey appears to have chosen the reassurance side of that balance.

What is established for now is narrower than the political reaction around it. There is no formal Budget document yet in the material provided, and the reported position remains source-based rather than publicly published policy. But if Healey has indeed ruled out a rise, one of the most closely watched options for raising money has already been put back in the drawer.