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Chancellor John Healey has dismissed calls from some Labour MPs to increase Capital Gains Tax (CGT). <\/b><\/p>\n
Cabinet ministers Wes Streeting and Louise Haigh both previously voiced support for raising CGT before Andy Burnham became prime minister in July. <\/p>\n
Ahead of next week’s Budget, as first reported by the Times, Healey is minded not to increase CGT – which is imposed on the profit people make when they sell an asset that has increased in value, such as shares in a company or properties which are not primary residences.<\/p>\n
The move followed warnings that it could end up costing the government money if wealthy people leave the country or defer selling off assets.<\/p>\n
If you pay income tax at the basic rate then CGT is charged at 18%. For higher and additional rate income tax payers, the CGT rate is 24%.<\/p>\n
Last year, HMRC estimated that lifting the lower rate of CGT by 1% could raise \u00a35m by 2028-9 but increasing the higher rate of CGT by 10% would reduce the Treasury’s receipts by \u00a33.6bn in 2028-9.<\/p>\n
The amount raised could be reduced if people adapt their behaviour to the tax rise, for example by moving abroad or deciding not to sell a property. <\/p>\n
The chancellor gave an indication of his approach last month in a speech when he spoke about the importance of businesses and self-employed people making profits.<\/p>\n
“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,” Healey said. <\/p>\n
Burnham has faced warnings against lifting CGT. His former adviser and Goldman Sachs Chief Economist Lord Jim O’Neill suggested it would send “the wrong message to business”.<\/p>\n
But influential Labour figures had pushed for equalising CGT and income tax, with the former generally attracting a lower tax rate.<\/p>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n
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