Labor party 'eyeing capital gains tax rise'

Rachel Reeves is under pressure from Labor Party leaders to increase capital gains tax. eip.telegraph.co.uk/bc72b371-0215-4d99-b27b-4223678de837.html?direct=true&id=bc72b371-0215-4d99-b27b-4223678de837&template=articleRendererHTML' class='tmg-particle Sticky-nav b371-0215 ​​-4d99-b27b-4223678de837' title='General Election' data-business-type='editorial' loading='eager' scroll='no' Frameborder='0'allow='web-share' style='width: 100%; min-width: 100%; border: none; position: relative; display: block; padding: 0px; margin: 0px;'>

Rachel Reeves is considering raising capital gains tax (CGT) rates in a bid to raise billions of pounds for spending on public services.

Labour Party sources say the shadow chancellor is considering introducing up to a dozen new measures in the autumn budget to increase income.

Shadow Cabinet members are lobbying her to raise CGT in line with income, which would mean a jump from the higher rate of 24 per cent to 40 or even 45 per cent, raising around £8 billion.

The Conservatives have promised not change CGT and on Thursday accused Labor of plotting to introduce a tax on the sale of primary residences for the first time.

A source close to Ms Reeves said last night the party would not impose CGT on family homes.

“We are not raising capital gains tax on primary homes,” he said. “We have fully costed, fully funded plans and identified specific tax loopholes that we would like to close so that we can immediately inject money into our public services.”

But they did not provide the same certainty for a second home. stating: “We have laid out our tax plans. Nothing in our manifesto will require further tax rises.”

CGT is triggered when an asset is sold for a profit. It is not charged on your main residence, and even on second homes it is charged at a much lower rate than earned income.

Less than 400,000 people in the UK pay CGT, according to official figures.

Based on average house prices according to National Building Society, a higher rate taxpayer selling a second home they bought ten years ago would currently pay £19,120 in CGT on a profit of £82,666 .

If Labor decides at the autumn Budget to bring CGT rates in line with income tax, the amount payable will rise by almost £12,747 to £31,866, according to analysis from investment platform AJ Bell.

Ms Reeves is under pressure Labor leaders are set to increase CGT to raise more money for public services, party sources say.

The shadow chancellor is believed to be considering up to a dozen new taxes and his colleagues are lobbying for rate hikes. CGT on secondary housing, reports The Guardian.

Others are pushing for the return of the health and social care tax introduced by Boris Johnson and scrapped by Liz Truss.

This discovery occurred among conservatives. claims Labor plans to raise taxes after the election.

In a televised debate on Tuesday night, Rishi Sunak accused Sir Keir Starmer of planning a £2,000 tax rise on every household in the next parliament.

Rishi Sunak on Thursday said Sir Keir was attacking him. Labor leader 'very excited', liar revealed.

The Prime Minister denied he was prepared to lie to win an election after Labor said it was planning a £2,000 tax raid on every family. were untrue.

When asked about Sir Keir calling him a liar, Mr Sunak told ITV: «I think it's quite a desperate thing.»

“Keir Starmer and the Labor Party are obviously very concerned that we have revealed their plans to raise taxes. on people, and that's what it shows.»

The Tories pledged on Wednesday not to raise property taxes, introducing a so-called family home tax guarantee, and called on Labor to do the same.

< p>Jeremy Hunt, the chancellor, has vowed that a Conservative government will not increase the number of council tax bands or increase stamp duty or CGT.

Ms Reeves is being held back by her campaign promises not to increase income tax, National Insurance and VAT.

However, party sources told the Guardian that Labor is planning a major package this autumn and Ms Reeves is seeking a «doctor's mandate» . She will argue that the state of government finances is so bad that major surgery will be required to fix it.

Nigel Lawson, the former Conservative chancellor, increased the CGT rate to match income tax in 1988, but Labor cut it again in subsequent budgets.

A less radical option for Labor would be to reverse Mr Hunt's decision on this year's budget. reduce the higher CGT rate for second homes, returning it from 24 percent to 28 percent.

However, such a move is unlikely to generate much money, if any, given that the Office for Budget Responsibility estimated in March that the CGT cut would actually generate a very small amount of extra money for the Treasury — £5 million in 2028. 29.

Medicare and Social Security Tax.

Some party members advocate bringing back Mr. Johnson's Medicare and Social Security tax.

It was announced in 2022 and initially it was levied at 1.25% interest on national insurance, the tax paid by working people until they reach state pension age.

It was planned that a completely separate tax called the Health and Social Security Levy would be introduced a year later. is calculated in the same way as NI but is also payable by those over pension age.

However, the levy, which was supposed to be partly intended to pay for improvements to health services, was scrapped by Ms Truss and has never been reinstated Mr Sunak.

The idea to reinstate the levy was backed by Sir Nicholas Macpherson, the former chief civil servant at the Treasury.

He recently wrote in the Financial Times: “The new chancellor will have at least a few months to come up with a creative solution to this tax conundrum. I would advise them to reconsider the health and social care levy.»

The 'kitchen sink' approach

However, Labor Party insiders said Ms Reeves was unlikely to bring back the levy as she believed it would be considered breaking her promise not to increase national insurance.

Another source said the shadow chancellor wanted to take a 'kitchen wash' approach to boost tax revenue and introduce radical reforms and investment in public services.< /p>

The 'kitchen wash' is a common tool in political and business circles where the new leader delivers all the bad news at once, thereby justifying drastic measures.

The man admitted, “It’s not what it is.” present to the public right now.»

Laura Trott, chief secretary to the Treasury, said: “The Prime Minister warned this week that Keir Starmer will increase taxes on working families by £2,094 to fill Labour's budget. A £38.5 billion black hole. 

“After spending two days accusing others of lying and ordering his team to dodge questions from the media, the truth has now surfaced: he is secretly preparing more than 10 new tax hikes later this year «.

»Keir Starmer has a long history of breaking commitments. He thinks he can win with carte blanche and then pretend he has the power to raise taxes, raid pensions and impose a pension tax. He now urgently needs to discuss with the British people what taxes he wants to raise and by how much.”