Full Breakdown
Labour Reviews Tax Shift to Fund Personal-Allowance Rise
By Drooid · · How we work
Core Proposal
Prime Minister Andy Burnham and Chancellor John Healey are examining a plan to fund a rise in the UK personal-allowance by gradually aligning Capital Gains Tax (CGT) with income-tax rates. The proposal, first outlined in a submission from Labour donor and Ecotricity owner Dale Vince, would pair a modest cut to income tax for lower earners with an increase in CGT. If adopted, the personal-allowance could be lifted to £15,570, a level only slightly below what it would have been had it not been frozen in 2021.
Background & Context
The personal-allowance— the amount of income on which no tax is paid—has been unchanged since 2021, limiting the tax relief available to low- and middle-income households.
Mechanism and Expected Impact
Vince estimates that combining a CGT increase with the cessation of interest payments on Bank of England reserves would generate enough money to fund the allowance rise. The Treasury spokesperson noted that tax decisions are ultimately the Chancellor’s prerogative and that the government does not comment on “rumour, speculation or proposals.”
By expanding the allowance, millions of households could receive a “meaningful boost,” according to the submission’s analysis.
Official Statements & Responses
- Treasury spokesperson – Emphasised that tax policy is set at fiscal events and declined to comment on the specific proposal.
- Dale Vince – Described the existing tax system as “backwards” and urged the government to redirect funds from banks to households.
Verbatim Quotes
- “As has always been the case, decisions on tax are a matter for the Chancellor to set out at fiscal events, rather than routinely commenting on rumour, speculation or proposals.” — Mr Vince
What’s Next
The Labour government’s first Budget under Burnham is slated for October 28. At that fiscal event, the Chancellor will outline any changes to CGT, income-tax rates, or the personal-allowance. Until then, the proposal remains under review by the Prime Minister’s office and the Treasury.
