Chancellor John Healey rejects calls to raise Capital Gains Tax ahead of Budget

Ruling out increase follows warnings of wealthy investor exodus

By LineZotpaper

Published20 October 2026

Read Time2 min

Chancellor of the Exchequer John Healey has ruled out raising Capital Gains Tax in next week's Budget, dismissing calls from some Labour MPs to increase the levy on profits from asset sales.

Healey, delivering his first Budget, said he wanted to avoid an investor exodus from the UK, according to reports. The decision follows warnings that higher CGT could cost the government money if wealthy individuals leave the country or defer selling assets, as reported by the Times.

The chancellor has previously indicated his aim to make the UK a "country of wealth creation", with policies that lift confidence, investment and profit.

Some prominent Labour figures had pushed for equalising CGT with income tax rates. Defence Secretary Wes Streeting called for a "wealth tax that works" in May, and First Secretary of State Louise Haigh had suggested capital gains should rise to be closer to income tax before Andy Burnham became prime minister.

However, Lord Jim O'Neill, former Goldman Sachs chief economist and adviser to Burnham, warned that raising CGT would send "the wrong message to business". Healey had already ruled out levelling the two tax rates, according to the Financial Times.

In a pre-Budget speech, Tory leader Kemi Badenoch is expected to urge the government to drop its spending plans and reduce borrowing.

Analysis

Why This Matters

The Budget will set the tax direction for the new Labour government and signal its approach to wealth creation versus redistribution.
Investors and businesses are watching closely for signals that could influence investment behaviour and economic growth.
The internal Labour debate over CGT highlights tensions between factions favouring higher taxes on wealth and those prioritising competitiveness.

Background

Capital Gains Tax is levied on profits from selling assets such as shares and second homes. There has been internal Labour debate over whether to raise CGT to fund public spending, with some arguing it would target wealth and others warning it could deter investment. Chancellor Healey's rejection suggests a more moderate approach than some on the left had hoped for.

Key Perspectives

John Healey (Chancellor): Wants to avoid an investor exodus and foster confidence, seeing high CGT as counterproductive to wealth creation. Labour advocates (Streeting, Haigh): Had argued for higher taxes on wealth to fund services and reduce inequality, with Streeting calling for a "wealth tax that works". Lord Jim O'Neill: Warned raising CGT would send the wrong message to business and potentially harm the economy. Kemi Badenoch (Tory leader): Expected to criticise government spending plans and call for lower borrowing, opposing any tax rises.

What to Watch

The Budget announcement for specific tax measures and any surprises on CGT or other levies.
Market reaction, particularly in UK stocks and gilts, to the chancellor's overall fiscal stance.
Any further Labour backbench pressure or public debate on tax fairness versus growth.

Sources

Chancellor rejects calls to raise Capital Gains Tax in Budget · BBC News

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12 claims in this story checked against 1 source: 12 supported.

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SupportedChancellor John Healey rejects calls to raise Capital Gains Tax ahead of BudgetBBC News: “Chancellor rejects calls to raise Capital Gains Tax in Budget”
SupportedRuling out increase follows warnings of wealthy investor exodusBBC News: “The move followed warnings that it could end up costing the government money if wealthy people leave the country”
SupportedChancellor of the Exchequer John Healey has ruled out raising Capital Gains Tax in next week's Budget, dismissing calls from some Labour MPs to increase the levy on profits from asset sales.BBC News: “Chancellor of the Exchequer John Healey has dismissed calls from some Labour MPs to increase Capital Gains Tax (CGT) when he hands down his first Budget. Healey ruled out lifting CGT”
SupportedHealey, delivering his first Budget, said he wanted to avoid an investor exodus from the UK, according to reports.BBC News: “Chancellor John Healey says he wants to avoid an investor exodus from the UK”
SupportedThe decision follows warnings that higher CGT could cost the government money if wealthy individuals leave the country or defer selling assets, as reported by the Times.BBC News: “The move followed warnings that it could end up costing the government money if wealthy people leave the country or defer selling off assets, the Times newspaper reported.”
SupportedThe chancellor has previously indicated his aim to make the UK a 'country of wealth creation', with policies that lift confidence, investment and profit.BBC News: “The chancellor has previously indicated he wanted the UK to be a country of wealth creation, saying government policies should lift confidence, investment and profit.”
SupportedSome prominent Labour figures had pushed for equalising CGT with income tax rates.BBC News: “But, influential Labour figures had pushed for equalising CGT and income tax”
SupportedDefence Secretary Wes Streeting called for a 'wealth tax that works' in May,BBC News: “Defence secretary Wes Streeting called for a 'wealth tax that works' in May”
Supportedand First Secretary of State Louise Haigh had suggested capital gains should rise to be closer to income tax before Andy Burnham became prime minister.BBC News: “Louise Haigh, a key ally of the prime minister, had suggested capital gains should go up to be closer to income tax, before she became Burnham's first secretary of state.”
SupportedHowever, Lord Jim O'Neill, former Goldman Sachs chief economist and adviser to Burnham, warned that raising CGT would send 'the wrong message to business'.BBC News: “His former adviser and Goldman Sachs Chief Economist Lord Jim O'Neill suggested it would send 'the wrong message to business'.”
SupportedHealey had already ruled out levelling the two tax rates, according to the Financial Times.BBC News: “Healey already ruled out levelling the two tax rates, according to the Financial Times, external.”
SupportedIn a pre-Budget speech, Tory leader Kemi Badenoch is expected to urge the government to drop its spending plans and reduce borrowing.BBC News: “In a pre-Budget speech on Tuesday, Tory leader Kemi Badenoch is expected to urge the government to drop its spending plans and reduce its borrowing.”