Chancellor rejects calls to raise Capital Gains Tax in Budget

Chancellor rejects calls to raise Capital Gains Tax in Budget

Chancellor John Healey says he wants to avoid an investor exodus from the UK

Chancellor of the Exchequer John Healey has turned down appeals from some Labour MPs to raise Capital Gains Tax (CGT) when he delivers his first Budget.

Cabinet ministers Wes Streeting and Louise Haigh had both earlier backed increasing CGT before Andy Burnham became prime minister in July.

With next week’s Budget approaching, Healey said he would not raise CGT - the tax charged on profits people make when selling an asset that has risen in value, such as shares in a company or properties that are not primary residences.

The decision came after warnings that it could ultimately cost the government money if wealthy people leave the country or delay selling assets, the Times newspaper reported.

The chancellor has previously signalled that he wants the UK to be a country of wealth creation, saying government policy should boost confidence, investment and profit.

Burnham has also been warned against increasing CGT. His former adviser and Goldman Sachs Chief Economist Lord Jim O'Neill said it would send "the wrong message to business".

However, prominent Labour figures had argued for aligning CGT with income tax, with CGT generally taxed at a lower rate.

Louise Haigh, a close ally of the prime minister, had said capital gains should rise to get closer to income tax before she became Burnham's first secretary of state.

Defence secretary Wes Streeting called for a "wealth tax that works" in May, soon after stepping down as a minister in former Prime Minister Sir Keir Starmer's government.

Healey had already ruled out equalising the two tax rates, according to the Financial Times

In a pre-Budget speech on Tuesday, Tory leader Kemi Badenoch is expected to call on the government to abandon its spending plans and cut borrowing.