Healey rejects calls to equalise capital gains and income tax rates
Chancellor John Healey has reportedly rejected calls by senior Labour figures to raise capital gains tax to the same levels as income tax, after warnings that an increase would harm Britain’s appeal to investors. Several senior cabinet ministers have in recent months called for capital gains tax (CGT) to be equalised with income tax in [...]
Chancellor John Healey has dismissed calls from senior Labour figures to raise capital gains tax to the same levels as income tax, citing concerns that such a move could deter investors from Britain. Although several cabinet ministers have previously advocated for equalizing capital gains tax (CGT) with income tax in the upcoming Autumn Budget, Healey has reportedly ruled out the proposal, according to the Financial Times.
Critics argue that equalizing CGT rates could distort investor behavior and lead to a loss of revenue for the Treasury, as people might choose to leave the country or delay selling assets. The left-leaning think-tank Centax has estimated that equalizing CGT rates could generate £14bn for the Treasury, while the Institute for Public Policy Research, a Labour-aligned group, has deemed the move a "no-brainer."
CGT is currently levied at 18 to 24 percent on most gains, including shares, funds, and residential properties. The Treasury is reportedly considering aligning CGT rates with income tax rates of 20 percent, 40 percent, or 45 percent. However, some experts, such as Anna Macdonald of Hargreaves Lansdown, have warned that a change in CGT rates could "penalise investors" and discourage domestic stock market investment.
The Treasury is currently developing capital gains relief proposals to encourage entrepreneurs to reinvest in the UK.
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