Chancellor rejects calls to raise Capital Gains Tax in Budget

Cabinet ministers Wes Streeting and Louise Haigh both previously voiced support for raising CGT before Andy Burnham became prime minister in July.

Ahead of next week's Budget, as first reported by the Times, external, 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.

The move followed warnings that it could end up costing the government money if wealthy people leave the country or defer selling off assets.

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%.

Last year, HMRC estimated, external that lifting the lower rate of CGT by 1% could raise £5m by 2028-9 but increasing the higher rate of CGT by 10% would reduce the Treasury's receipts by £3.6bn in 2028-9.

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.

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.

"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.

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".

But influential Labour figures had pushed for equalising CGT and income tax, with the former generally attracting a lower tax rate.

Louise Haigh, a key ally of the prime minister, had suggested capital gains should go up to be closer to income tax, before she became Burnham's first secretary of state.

In an article for the Renewal journal,, external Haigh argued that raising CGT would "shift the taxation burden away from punishing work, and towards unproductive capital accumulation which does little to grow the everyday economy".