Chancellor John Healey has ruled out raising Capital Gains Tax in next week's Budget, rejecting pressure from some Labour MPs and former cabinet allies to increase the levy on investment profits.
Healey said he wants to avoid an investor exodus from the UK. The decision follows warnings that higher CGT could cost the government money if wealthy people leave the country or delay selling assets, according to the Times newspaper.
Cabinet ministers Wes Streeting and Louise Haigh both previously supported raising CGT before Andy Burnham became prime minister in July. Haigh, now Burnham's secretary of state, had suggested capital gains should rise to align more closely with income tax rates, which currently attract higher levies. Streeting, now defence secretary, called for a "wealth tax that works" in May after resigning from Sir Keir Starmer's government.
Healey has already ruled out equalizing the two tax rates, according to the Financial Times.
The chancellor has previously stated he wanted the UK to be a country of wealth creation, with government policies lifting confidence, investment and profit. Lord Jim O'Neill, former adviser to Burnham and Goldman Sachs Chief Economist, warned that raising CGT would send "the wrong message to business."
The rejection comes ahead of Healey's first Budget next week. Conservative leader Kemi Badenoch is expected to use a pre-Budget speech on Tuesday to urge the government to drop spending plans and reduce borrowing.
Banks are expected to face higher taxes in the Budget, though specifics remain unclear.