UK Chancellor Rules Out Capital Gains Tax Hike in Budget

Chancellor of the Exchequer John Healey has rejected proposals from some Labour Members of Parliament to increase the Capital Gains Tax (CGT) in his upcoming Budget. The decision comes despite previous support for such a measure from cabinet ministers Wes Streeting and Louise Haigh before Andy Burnham became prime minister in July.

CGT is levied on the profit made from selling an asset that has appreciated in value, such as company shares or non-primary residences. Healey's office indicated that raising the tax could potentially reduce government revenue if wealthy individuals decide to defer sales or relocate. The chancellor has previously expressed a desire for the UK to be a hub for wealth creation, advocating for policies that boost confidence, investment, and profit.

Former adviser to the prime minister and Goldman Sachs executive Lord Jim O'Neill had warned against increasing CGT, stating it would send "the wrong message to business." However, influential Labour figures had advocated for aligning CGT rates with income tax rates, as CGT is typically taxed at a lower percentage.

Louise Haigh, now the prime minister's first secretary of state, had publicly supported bringing capital gains tax rates closer to income tax rates prior to her current appointment. Similarly, Defence Secretary Wes Streeting had called for a "wealth tax that works" in May, shortly after leaving his ministerial role in the previous government under Prime Minister Sir Keir Starmer. Healey has already ruled out equalizing the two tax rates, according to the Financial Times.

Meanwhile, Conservative leader Kemi Badenoch is expected to use a pre-Budget speech to call on the government to reduce spending and borrowing.