Healey Rejects Capital Gains Tax Hike Ahead of UK Budget

UK Chancellor John Healey has decided against raising capital gains tax in his first Budget on October 28, 2026, following pressure from Labour figures to increase taxes on wealth. According to BBC reporting and The Times, Treasury concerns that higher rates could drive wealthy investors abroad, delay asset sales and ultimately reduce government revenue have shaped the decision.

The move signals a preference for protecting business confidence and investment while addressing pressure on public finances. Capital gains tax applies to profits from selling assets such as shares and properties that are not an individual's primary residence. According to the current UK tax framework cited in the reports, the rates are 18% for basic-rate taxpayers and 24% for higher- and additional-rate taxpayers.

Equalizing capital gains tax with income tax had been discussed as a potential revenue-raising measure. The Times reported that Healey instead intends to pursue a more restrained fiscal approach, with a targeted package of cost-of-living support and measures aimed at raising revenue from other sources.

Healey outlined his economic priorities in a speech last month, emphasizing the importance of business profitability and investment in supporting national growth.

"I want to see this country as a country of wealth creation. I want our government decisions and policies to raise the levels of confidence, and investment, and profit in British business," Healey said.

Several senior Labour figures had previously advocated increasing capital gains tax. Louise Haigh, now a senior ally of Prime Minister Andy Burnham, called for the levy to move closer to income tax rates before Burnham took office in July. Defence Secretary Wes Streeting also supported stronger taxation of wealth, including a proposal for a more effective wealth tax.

Former Goldman Sachs chief economist Lord Jim O'Neill, an ally of Burnham, warned that a substantial increase could undermine business confidence. He welcomed the reported decision to leave capital gains tax rates unchanged.

"If this is what happens it's eminently sensible and just what's needed to keep the improving momentum in the economy going. As I have said a number of times, raising capital gains tax would send very much the wrong message to business," O'Neill told The Times.

Evidence from HM Revenue & Customs has strengthened concerns that higher rates could produce unintended consequences. According to estimates cited by The Times and the investment publication Interactive Investor, increasing the higher capital gains tax rate by 10 percentage points could reduce Treasury receipts by approximately £3.6 billion in 2028-29 as taxpayers change their behavior.

Investors may postpone selling assets to avoid higher tax bills, while some wealthy individuals and business owners could relocate overseas. Because capital gains tax generally becomes payable when an asset is disposed of, delaying a sale can defer the government's receipt of the tax.

Interactive Investor reported that Healey's decision does not necessarily rule out broader capital gains tax reform. One option under discussion is changing the treatment of assets when their owners die, when capital gains tax is generally not charged and beneficiaries typically receive an updated tax cost basis for inherited assets.

The Office of Tax Simplification proposed in its 2020-21 review replacing the existing uplift with a no-gain, no-loss approach based on the deceased owner's historical acquisition cost. Such a change could expose beneficiaries to capital gains tax when they eventually sell inherited assets, potentially alongside inheritance tax.

Healey's Budget is also expected to include a tax crackdown on online marketplaces, requiring platforms to collect value-added tax owed by retailers selling through their services. The Times reported that the measure could raise up to £1 billion, with the proceeds expected to help reduce business rates for high street shops.

The chancellor is also expected to introduce targeted assistance for lower-income households facing energy costs and measures to reduce energy expenses for manufacturers. The Times reported that the government plans to reduce its fiscal headroom from £23 billion to around £15 billion.

Conservative leader Kemi Badenoch is expected to criticize the government's spending plans in a speech in London on Tuesday, arguing that Labour has not adequately addressed the pressure on public finances. Her remarks will precede the October 28 Budget, when Healey is scheduled to set out the government's tax and spending measures.