Full Breakdown
Healey Rules Out Capital Gains Tax Rise Ahead of First Budget
By Drooid · · How we work
Core Decision
Chancellor John Healey has confirmed that the Autumn Budget on October 28 will not include any increase to Capital Gains Tax (CGT). Treasury sources say the decision was driven by concerns that higher rates could prompt wealthy individuals to defer asset sales or relocate abroad, potentially reducing tax receipts.
Background & Context
Labour’s 2024 manifesto pledged not to raise income tax, VAT or National Insurance, leaving CGT as a possible revenue lever. The previous chancellor, Rachel Reeves, set two fiscal rules: no borrowing for day-to-day spending and a requirement to reduce debt-to-GDP by the end of the parliament. The Office for Budget Responsibility (OBR) calculated a headroom gap of £23.6 bn, but analysts warned the buffer had narrowed. Cabinet ministers Louise Haigh and Wes Streeting had advocated aligning CGT with income-tax rates, but Healey opted for a “steady as she goes” approach.
Data & Statistics
- Fiscal headroom: OBR gap of £23.6 bn; Healey plans to cut the buffer to roughly £15 bn.
- CGT rates: 18 % for basic-rate taxpayers, 24 % for higher-rate taxpayers.
- Banking surcharge: The levy on banks’ profits sits at 3 %, after being reduced from 8 % under the previous government. The four largest lenders generated £200 bn in pre-tax profit over the past five years.
- Online marketplace VAT: New rules requiring platforms such as Amazon, eBay and Temu to collect VAT are projected to raise up to £1 bn for the Treasury, earmarked for high-street business-rate cuts.
- Labour market: Payroll data show a rise of 13,000 jobs in the latest month, with unemployment at 4.7 %, the lowest level since July 2025.
Official Statements & Responses
Treasury officials echoed the view that behavioural responses could erode revenue if CGT were increased. Conservative leader Kemi Badenoch is scheduled to criticize Labour’s fiscal stance, arguing that the government should “live within our means” and cut spending rather than rely on new taxes.
Criticism & Opposition
- Louise Haigh, first secretary of state, and Wes Streeting, defence secretary, previously called for CGT to be brought “closer to income-tax rates.”
Conflicting Reports & Gaps
- Fiscal headroom estimates vary: OBR (£23.6 bn), Healey’s target (~£15 bn), and other analysts. No consensus exists on the exact remaining buffer.
- Revenue from the banking surcharge is described as the “biggest revenue-raising measure,” yet projected figures differ, with some citing a potential £2 bn annual uplift.
- The allocation of online-marketplace VAT proceeds for business-rate relief remains unspecified.
Verbatim Quotes
- “Stronger growth has now finally landed with the labor market,” — Deutsche Bank.
- “It also reflects broader concerns about economic competitiveness. At a time when the government is trying to encourage investment and growth, another rise in CGT could send the wrong message to entrepreneurs, business owners and investors.” — Michael Healy, chief executive of IG Consumer.
What’s Next
- October 28: Healey will deliver the budget, expected to announce the bank profit surcharge increase, the online-marketplace VAT regime, and targeted cost-of-living support for low-income households.
- Post-budget: Conservative leader Kemi Badenoch will deliver a speech urging the government to cut spending and reduce borrowing.
- Treasury officials will monitor the impact of the new VAT rules on high-street business rates and assess whether additional fiscal adjustments are needed to meet Labour’s targets.
