Healey Rejects Capital Gains Tax Hike Ahead of Budget
Chancellor dismisses calls for increased CGT, prioritising wealth creation amidst public expectation of tax rises.
Sarah Connor
Chancellor of the Exchequer John Healey has dismissed calls to increase Capital Gains Tax in his upcoming Budget.
A potential move involves reversing a previous cut to the bank surcharge on corporation tax. The rate dropped from 8% to 3%, and restoring it could generate an estimated £2 billion annually.
HSBC, NatWest, Barclays, and Lloyds Banking Group collectively reported approximately £15 billion in profit during the first half of the year.
Healey, however, ruled out increasing capital gains tax (CGT), which applies to profits from selling assets like second homes and shares. This decision aligns with his previous indications, where he expressed a desire for the UK to be a country of wealth creation.
raising capital gains tax would send very much the wrong message to business.
Lord O’Neill of Gately stated that "raising capital gains tax would send very much the wrong message to business." Healey affirmed, "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."
Current CGT rates stand at 18% for basic-rate taxpayers and 24% for higher/additional-rate taxpayers. The decision not to increase CGT comes despite figures like Louise Haigh, now Burnham's first secretary of state, previously voicing support for such a rise, and Wes Streeting calling for a "wealth tax that works" in May.
Pre-Budget polling by Ipsos indicates 65 per cent of the public expect tax rises in the upcoming statement. The same poll revealed 67 per cent of the public believe the Chancellor is doing neither a good nor bad job, with 58% believing the country is heading in the wrong direction.
The Chancellor acknowledged Britain is in a "tough" position ahead of the Budget. Economists suggest higher inflation could increase tax revenue due to frozen thresholds until 2031.
Concerns persist that higher CGT rates could encourage wealthy individuals to move abroad or delay selling assets. Billionaires David Reuben and Simon Reuben relocated to Monaco, while hedge fund tycoon Chris Rokos moved to Greece. London saw a bigger exodus of the super-wealthy than any city except Moscow.
Separately, the Government confirmed plans to end so-called "double provision," a loophole enabling offenders to claim hundreds of pounds a month for living costs while receiving NHS psychiatric treatment. Proposals are set to be laid in Parliament on Tuesday to close this loophole, preventing serious criminals from receiving up to £800 a month in universal credit over several years.
Conservative leader Kemi Badenoch is due to warn the Government to slash spending plans and reduce borrowing. The Conservative party announced plans to cut government spending by £70bn a year, with Badenoch advocating that the government must "live within our means."
live within our means.