Andy Burnham’s Tax Reform Agenda: CGT Alignment, Devolution and a 50 % Top Rate

Burnham, Labour’s incoming leader, is weighing three moves: aligning Capital Gains Tax with the three income-tax bands (20 %, 40 %, 45 %), devolving selected HMRC income-tax powers to regions such as Greater Manchester, and, analysts note, hinting at a 50 % additional rate for earnings above £125,140. CGT currently sits at 18 %/24 %; income-tax thresholds are frozen until 2031, creating fiscal drag that could cost a £35,000 earner up to £500 by then.

Birmingham Mail

Labour’s decision to freeze personal-allowance and income-tax thresholds until 2031 has been described as “fiscal drag,” a stealth increase that pushes more workers into higher brackets without raising headline rates.

Birmingham Mail

Aligning CGT with income-tax bands could raise ~£12 bn annually. Fiscal drag may erode £500 of a £35k earner’s disposable income by 2031. A 50 % top rate would add about £1,250 tax for a £150k salary. The current top income-tax rate stays at 45 % above £125,140.

Birmingham Mail

Burnham told LBC that “there is room for movement on tax” while reaffirming Labour’s pledge not to raise headline income-tax, NIC or VAT. The Tony Blair Institute, via Ward-Jackson, says raising CGT to income-tax levels would “send entirely the wrong signal.” Lord O’Neill warned that “we can’t just keep avoiding what are seen as difficult choices, and having back-door ways of raising tax.”

Birmingham Mail

Critics say higher CGT and a 50 % top rate could deepen the UK’s “risk-aversion crisis,” push entrepreneurs abroad, and trigger a Laffer-curve loss of revenue. While Labour MPs Wes Streeting and Louise Haigh back CGT alignment, opponents warn devolution may create uneven regional tax regimes and erode a uniform national code.

Birmingham Mail

Burnham pledges no headline income-tax rise yet analysts cite his hints at a 50 % bracket, a clear contradiction. Details of the devolution plan remain vague and no budget proposal has been released.

Birmingham Mail

The proposals could reshape UK revenue, affect investment decisions, and shift fiscal balance between Westminster and devolved regions. A 50 % top rate may trigger capital flight among high-earning professionals, shrinking the talent pool needed for growth.

Andy Burnham Signals Punitive 50% Tax Bracket for High-Earning UK Workers

• “While everyone else is racing to attract entrepreneurial talent, we would be punishing them and making ourselves poorer as a result,” — Guy Ward-Jackson, Senior Analyst, Tony Blair Institute

The Independent

• “Increasing capital gains tax to the level of income tax would undermine those incentives and send entirely the wrong signal.” — Guy Ward-Jackson, Senior Analyst, Tony Blair Institute

The Independent

• “We can’t just keep avoiding what are seen as difficult choices, and having back-door ways of raising tax.” — Lord O’Neill, former Treasury Minister

Birmingham Mail

Burnham’s team will detail the proposals in the spring Budget, and Parliament will debate any devolution legislation. Stakeholders will watch for clarification on the 50 % rate and CGT alignment before the next election.

Birmingham Mail