Healey rules out Capital Gains Tax rise in upcoming Budget

Economic growth prioritized over tax hikes

Mr Healey stated that the government intends to prioritise wealth creation and economic growth rather than penalise it with higher taxes. In a pre-Budget speech, he said government policies should lift confidence, investment and profit.

The Chancellor warned that raising Capital Gains Tax could cause wealthy individuals to leave the United Kingdom or defer selling assets. The Times reported that these concerns led to the decision, as such actions could ultimately cost the government money.

Mr Healey also rejected proposals to raise the tax because it would harm Britain's appeal to investors. Lord O’Neill of Gately, who has advised Mr Burnham and worked on the Northern Powerhouse project, stated that raising capital gains tax would send the wrong message to business.

Cabinet ministers and think-tanks had pushed for change

Labour MPs and cabinet colleagues, including Louise Haigh and Wes Streeting, had previously called for a rise in Capital Gains Tax. Cabinet ministers Wes Streeting and Louise Haigh both spoke of raising capital gains tax over the summer before Andy Burnham became Prime Minister.

Calls for a sharp increase in the tax were also backed by key allies of Prime Minister Andy Burnham, including former Labour leader Neil Kinnock. The think-tank Centax has previously argued that equalising CGT with income tax could generate £14bn for the Treasury.

The Institute for Public Policy Research, a Labour-aligned group, has described the proposal to equalise CGT with income tax as a "no-brainer". John Healey, who has was the Member of Parliament for Rawmarsh and Conisbrough since 1997, has been Chancellor of the Exchequer since 2026.

Banks expected to face higher taxes

Senior banking executives told the BBC on 20 October 2026 they expect Mr Healey to raise taxes on the banking sector. The four largest UK lenders, HSBC, NatWest, Barclays and Lloyds Banking Group, have generated £200bn in pre-tax profits over the past five years.

The biggest revenue-raising measure expected in the Budget is an increase in the rate banks pay on their profits. This measure is intended to fund cost-of-living support for households and businesses.

Current Capital Gains Tax rates and structure

Capital gains tax is currently charged at 18 per cent for normal rate taxpayers and 24 per cent for higher and additional rate taxpayers. This tax applies to profits made when selling assets, including company shares, funds, and non-primary residences.

Treasury officials had considered proposals to align these rates with income tax bands of 20 per cent, 40 per cent, or 45 per cent. However, the Chancellor has rejected the proposal to equalise capital gains tax rates with income tax.

Anna Macdonald, investment strategy director at Hargreaves Lansdown, warned that a fresh upheaval of the tax would penalise investors and discourage investment in the domestic stock market. The Treasury is currently working on capital gains relief proposals intended to encourage entrepreneurs who sell their businesses to reinvest in the UK.

Fiscal challenges and the £35bn budget blackhole

The Chancellor has acknowledged that the country is in a tough position ahead of his statement. Economists have forecast that the government's fiscal headroom, which stood at £23.6bn in March, has shrunk due to the conflict in the Middle East.

Healey has announced a reduction in this fiscal headroom. The Institute for Fiscal Studies warned on Sunday 11 October 2026 that the government faces a £35bn blackhole in its spending plans.

Opposition response and public sentiment

Conservative leader Kemi Badenoch is due to give a speech on Tuesday urging the government to live within our means. She will signpost a package of £70bn in spending cuts, which includes reductions to welfare and the Civil Service headcount.

Recent polling conducted by Ipsos between 9 and 12 October found that 65 per cent of the 1,077 Britons surveyed expect some form of tax rise at the Budget. The same polling indicated that 67 per cent of the public believe the Chancellor is doing neither a good nor a bad job.

Maiden Budget delivery date

Chancellor John Healey is scheduled to deliver his maiden Budget on 28 October 2026.