Chancellor John Healey has rejected calls to increase capital gains tax in the upcoming budget, amid concerns the move could hinder economic growth. Capital gains tax is the levy applied to profits earned from the sale of assets, such as shares or property. The decision follows reports that the Treasury is wary of potential revenue losses if taxpayers choose to leave the country or delay selling assets to avoid higher rates.
The move comes after several members of the Labour government, including Wes Streeting and Louise Haigh, suggested raising the tax during the summer months before Andy Burnham became Prime Minister. However, advisors and business figures have cautioned against the change. Lord O’Neill of Gately, who has advised the Prime Minister, stated that increasing the tax would send the wrong message to the business community.
Instead of capital gains adjustments, the government is reportedly planning to increase the tax rate that banks pay on their profits. This measure is expected to be used to fund cost-of-living support for households and businesses. On Tuesday, October 20, 2026, Conservative leader Kemi Badenoch is scheduled to deliver a speech urging the government to reduce spending and borrowing, proposing a £70 billion package of cuts to welfare and the civil service.
The impact of the broader budget will be felt by the banking sector through the reported profit tax increase, though the specific percentage rise and the exact amount per institution were not reported. For the general public, the focus shifts to how the revenue from banks will translate into cost-of-living support. A person's day-to-day finances may be affected by whether this support offsets current inflation or price increases, though the specific delivery mechanism for these benefits has not yet been detailed.
The chancellor's approach follows a period he described as "tough." The next critical step occurs on October 28, 2026, when Healey is scheduled to deliver the formal Budget statement. This will confirm the final tax rates and spending plans.