Chancellor John Healey 'rules out increasing capital gains tax' in Budget

The Chancellor has reportedly dismissed demands to increase capital gains tax in next week’s Budget, following warnings that the change could stifle economic growth.

In recent months, a number of leading Labour figures have pushed for John Healey to increase the levy.

The tax is applied to the profit made from selling off assets like a house or shares.

But Mr Healey has apparently rejected the pitch from his Government colleagues over fears it could drain Treasury revenues if high earners relocate abroad or delay asset sales.

Billionaires David Reuben and brother Simon, two of the UK’s wealthiest men, relocated to Monaco with their estimated £28 billion fortune.

Hedge fund tycoon Chris Rokos, who paid £330 million in taxes last year, making him Britain’s third-biggest taxpayer, has also relocated to Greece where the tax set-up is more favourable.

Wealthy hedge fund manager Chris Rokos reportedly relocated to Greece for tax reasons

PA

A report published last year found that London had suffered a bigger exodus of the super-wealthy than any city in the world except for Moscow, new data shows.

Cabinet ministers Wes Streeting and Louise Haigh, a staunch ally to Prime Minister Andy Burnham, had previously discussed putting up capital gains tax during the summer, prior to the change of leadership in Downing Street.

The suggestion proved divisive, however, with Lord O’Neill of Gately, who has advised Mr Burnham and worked on the Northern Powerhouse project, telling The Times that “raising capital gains tax would send very much the wrong message to business”.

The biggest revenue raising measure set to be in the Budget is an increase in the rate banks pay on their profits, widely reported across the media last week.

That is expected to fund cost-of-living support for households and businesses.

A wealth tax has also been mooted as a possibility – a policy that analysts suggest could disproportionately impact London.

The Right-leaning Centre for Policy Studies has warned against both a hike in capital gains or the imposition of another wealth tax.

First Secretary of State Louise Haigh had spoken about raising capital gains tax over the summer

PA Wire

The think tank said the Chancellor was told that a wealth tax would make the UK the most expensive place to own a home among countries in the Organisation for Economic Co-operation and Development.

They include most of Europe, America, Canada, Korea, Japan, Australia and New Zealand

The Chancellor has acknowledged that Britain finds itself in a “tough” position ahead of the Budget, and is reported to be downplaying the prospect of major revenue-raising measures in his October 28 statement.

Conservative leader Kemi Badenoch is meanwhile due to warn the Government to slash its spending plans, and reduce its borrowing at the Budget.

In a speech on Tuesday, she will urge Mr Burnham and his Chancellor to “live within our means”.

She is preparing to highlight the Tory plan for a £70bn package of cuts to spending – including to welfare and the Civil Service headcount – as a place to start.

Pre-Budget polling by Ipsos has meanwhile revealed that the majority of the public have a mixed opinion of the Chancellor, as 67% of them believe he is doing neither a good nor bad job.

The survey of 1,077 Britons carried out between October 9 and 12 also found that 65% of the public is expecting some form of tax rise at the Budget.