Healey will not raise capital gains tax to income tax levels, the FT reports
A smaller increase remains possible, the Financial Times said, citing four sources. Capital gains tax is charged at 18 per cent for basic-rate taxpayers and 24 per cent for higher-rate taxpayers, and raised £24 billion in 2025/26.
John Healey will not raise capital gains tax to the same level as income tax, the Financial Times reported on Tuesday, citing four sources, following speculation that the change could be announced in the Budget on 28 October.
Ruling out equalisation still leaves the Chancellor with a Budget to fill. Healey is under pressure to raise billions of pounds in tax at his first Budget, to offset higher borrowing costs and to fund Andy Burnham's plans for more defence spending and expanded social care.
The FT said Healey could still opt for a smaller increase in capital gains tax. The tax is currently charged at 18 per cent for basic-rate taxpayers and 24 per cent for higher-rate taxpayers, compared with income tax rates of 20 per cent and 40 per cent for basic and higher-rate taxpayers. The Sun reported that gains above a £3,000 annual allowance are generally taxed at those rates, depending on a taxpayer's unused basic-rate band.
Ruling out equalisation still leaves the Chancellor with a Budget to fill.British Journal analysis
Healey's room for manoeuvre is limited by earlier promises. He has said he will stick to Labour's 2024 manifesto commitments not to raise the rates of income tax, value added tax, corporation tax or social security contributions.
Capital gains tax raised £24 billion in the 2025/26 tax year. Economists have warned that raising the rate could change behaviour and result in a drop in income for the Treasury, as people decide not to sell assets or leave Britain. The Sun reported similar warnings, that a sharp rise could make Britain less appealing to investors, and noted that a smaller rise has not been ruled out.
That leaves the question for 28 October narrower than it was, but not closed: equalisation appears to be off the table, while the scale of any smaller change, and what else the Chancellor reaches for instead, remains to be announced.
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